Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert Ainsworth.]

Health and Safety

Mr. Michael Clapham: I have been fortunate in securing a debate on an important subject. However, I should begin by congratulating the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Mansfield (Mr. Meale) on his recent promotion.
Because of the nature of their work, some people are more vulnerable than others; nevertheless, occupational health and safety affects everyone in the world of employment. I therefore welcome the priority that the Government have given to occupational health and safety.
This year, the Health and Safety Executive will receive a £4.45 million increase, reversing cuts agreed by the previous Administration. That increase also signals an end to government hostility towards, and neglect of, occupational health and safety, which were all too apparent during the previous Administration's 18 years in office. The previous Administration were particularly hostile towards trade unions' role in occupational health and safety. They were also preoccupied with deregulation, and that distracted them from considering health and safety issues. It is good that that situation has ended.
Other Departments in the new Government are complementing the action being taken by the Department of the Environment, Transport and the Regions. The Department of Health's Green Paper on public health, for example, will address the issue of occupational health and safety. I am pleased that the new Government are making health and safety a much higher priority.
I should say that not all of my suggestions and questions in this debate will fall within the remit of my hon. Friend the Minister. Some may be dealt with only by a joint approach, which is already under way, among Departments and others.
Earlier this year, the Health and Safety Executive and the Department of Health sponsored a conference to focus on the health and safety needs of those working in small and medium enterprises. The Government's "Public Health" Green Paper was started after the conference. Before the conference, the Health and Safety Executive circulated a document entitled, "Developing an Occupational Health Strategy for Great Britain". The closing date for submissions on the document to the Health and Safety Executive is 11 December 1998, and I urge all my hon. Friends and other hon. Members to make their submissions on developing an occupational health strategy before that date.
I shall deal first with stress. It is estimated that approximately 19.5 million working days are lost annually because of ill health. Statistics provided by the Health and Safety Executive show that, of those lost days, about 7 million working days are lost because of stress-related illness. Stress is increasing annually, and is very much related to changes in employment structures. Flexible working, for example, has been introduced as a response to globalisation, creating uncertainty that causes unease, discomfort and stress. A second factor contributing to increased stress is the quest for ever-greater productivity, to ensure our competitiveness. Inadequate investment in British industry is a contributing factor to such stress.
I wish to elaborate on that a little because it is clearly related to the problem of stress in British industry. Some hon. Members may have seen an article in The Sunday Times  of 11 October written by Andrew Lorenz and David Smith. It was based on the McKinsey studies carried out for the Treasury, and some of the figures were astonishing. For example, it showed that our main competitors—Germany, Japan, America and France—invest far more per worker than the UK. Germany invests a massive 67 per cent. more; Japan invests 55 per cent. more; America invests 52 per cent. more and France invests 46 per cent. more. If those figures show anything, it is that workers are as good as the tools provided for them to work with. As less is invested in British workers, enormous pressure is put on them to produce more to meet that competitive agenda.

Mr. Ken Purchase: I entirely agree with my hon. Friend's remarks on investment—they would be echoed throughout industry—but is it not also true that, at the point of production, the greatest problem on the shop floor is stress and the drive for greater productivity? Does it not lead to that well-known syndrome of the "tear arser", who puts other people's safety in danger, as well as his or her own? Should not my hon. Friend now deal with that matter, given that so many injuries are caused to people on the shop floor as a result?

Mr. Clapham: I thank my hon. Friend for his intervention. As a result of those pressures on the shop floor, supervisory staff and managers often resort to bullying. That feature is clearly shown in a recent study by the Trade Union Congress, which showed that bullying is one of the main characteristics that leads to stress. We must also bear in mind that, in the teaching, social work and nursing professions, society's demand for greater accountability, which is quite right, has led to more administration. When that is added to all the other pressures, it leads to stress.
Will the Minister consult the Health and Safety Commission, which has been looking at this issue for some time, to see what action it has taken? We require stress management strategies, perhaps embraced within an approved code of practice. If that were applied in industry, we could start to deal with stress. Unless we take action, more and more working days will be lost.
The cost of work-related ill health is immense. An estimated 2 million people a year suffer from work-related illness and 250 to 300 people a year die from work-related injuries. The figure for 1997–98 was 268 and for the previous year it was 287. Thus, there is still an enormous death toll. Moreover, of the estimated 10,000 deaths


related to ill health, 3,000 to 4,000 are caused by exposure to asbestos. The human suffering caused by that carnage is immeasurable, and the cost to the economy is enormous. The chairman of the Health and Safety Commission, who spoke at an all-party group on occupational health and safety earlier this year, estimated that the cost to the economy was between £16 billion and £18 billion—a huge sum by anyone's reckoning. If we are to reduce that figure, we must develop strategies that can be used in industry to prevent the development of stress.
Last week, the National Association of Occupational Health Projects held a seminar in the House. It was addressed by Professor Malcolm Harrington of the occupational health department at Birmingham university, by the Minister for Public Health, by a representative of the Health and Safety Executive and by various speakers from occupational health projects throughout the country. The seminar drew attention to the enormous amount of work that occupational health projects have done in the past 20 years. Those involved work in the community and help to identify the causes of work-related illnesses. They also work with trade unions and management to create preventative strategies. Their work in the past 20 years is enormously valuable.
A few of the occupational health projects are funded by the Department of Health, but the vast majority depend on an assortment of funding. Many spend much of their energy raising funding in order merely to survive. I should like the health improvement plans drawn up by area health authorities to embrace the work done by the occupational health projects. The health projects could then engage with local primary care groups, which would add to their valuable contribution and extend it to improving the health of the nation.
Thus, occupational health projects play a valuable part in protecting the health of the community. Some years ago, they came up against the problem of the increasing number of people diagnosed as suffering from asbestosis or mesothelioma cancer caused by asbestos. We know from statistics that have been provided that, every year, between 3,000 and 4,000 people will die in the UK as a result of exposure to asbestos. Government estimates suggest that that figure will continue to increase, and could reach 10,000 deaths by 2020.
Since 1985, blue and brown asbestos have been banned in the UK, but large amounts of white asbestos are still entering the country. Much of it is contained in materials used in the construction industry. May I suggest that the Minister's Department send a memorandum to other Departments that are involved in large construction programmes, such as the Departments of Health and of Education and Employment, advising them to tell contractors working on those construction programmes not to use materials that contain white asbestos? It is not always easy to discern materials that contain white asbestos because they are badly labelled and often come from eastern Europe. Contractors do not always know that some roof tiles, floor tiles and piping contain white asbestos. It is therefore important that the two Departments with major construction programmes are made aware that many of the materials used in construction contain white asbestos.
The evidence that white asbestos is dangerous to health is overwhelming. The Health and Safety Executive accepts that there is no safe threshold for working with white asbestos. In most areas where it is used, safe and adequate substitutes exist.
Earlier this year, the Health and Safety Commission commissioned research by Leicester university after a bizarre decision had been made in one of the European technical committees that asbestos substitutes may be more dangerous than white asbestos. That research has now been completed and published and it shows that white asbestos is more of a hazard than the substitutes used to replace it. In addition, the Department of Health's committee on carcinogenicity stresses that, wherever possible, alternatives to asbestos should be used. Finally, if that were not sufficient evidence, nine EU countries have implemented their own unilateral bans on white asbestos.
My hon. Friend the Member for Tooting (Mr. Cox), who is president of the Council of Europe's Social, Health and Family Affairs Committee has steered through a report calling for a ban on white asbestos. I pay tribute to his work in processing that report.
Had it not been for the Canadian producers keeping Europe at bay, we might have already imposed a ban, but the Canadian producers would have us believe that white asbestos is so safe that we could pour it on our cornflakes in the morning. They do not realise the problem, or will not accept the evidence that it is a dangerous material. However, Europe is not their real target. Their target is the third world, where there are no controls. They know full well that it offers a limitless market. At the same time, through the World Trade Organisation, they can obstruct a European ban. There is a tendency for such matters to become caught up in interminable bureaucracy.
If it appears to my hon. Friend the Minister that the move towards a European ban is becoming bogged down and there seems to be little progress, will he consider pressing ahead with a unilateral United Kingdom ban to protect future generations? In my view, that should be done as soon as possible.
Even when we have dealt with white asbestos by prohibition, there are still problems to be faced. One is enforcement. Although stringent regulations have been in place since 1983, there are still difficulties with enforcement. I note that the Health and Safety Executive has become more vigorous, but resources are limited and inspections and fines are inadequate. The record shows that 768 companies are licensed to work removing asbestos in demolishing buildings yet, between 1990 and 1993, the average fine for violation of the regulations was £1,570. During that three-year period, no company had its licence revoked.
I am aware that there has been a more vigorous approach recently and, in 1996, a contractor was imprisoned for exposing his workers to asbestos while demolishing an old factory in Bristol. So there are signs that the Health and Safety Executive has started to take a more robust approach to breaches of the regulations. Nevertheless, I want to press my hon. Friend the Minister to take the matter up with the Health and Safety Executive and ensure that the regulations are stringently applied and the level of fines is significantly increased. That would


send a clear signal that the Health and Safety Executive and people at large were not prepared to accept violation of the regulations.

Mr. Purchase: My hon. Friend addresses the matter with great knowledge. Does he accept that the conditions under which people go to work are such that a worker complaining about such a situation and ultimately refusing to work in those conditions would probably be sacked? If he had been employed for less than 12 months, he would have no redress whatever. Is it not a simple matter of giving individual workers more power to take responsibility for their own health and safety at work without the fear of instant retribution and sacking?

Mr. Clapham: I am grateful to my hon. Friend for that intervention and I accept his point. I shall deal with that issue when I discuss safety representatives. I have some proposals for my hon. Friend the Minister, but it is quite true that, at present, anyone who raises an objection in the workplace faces the threat of dismissal, and that needs to be addressed.
Let me return to the problem of asbestos. Even with rigid enforcement, there are still difficulties because there is an enormous amount of the stuff in public buildings. The TUC has suggested that there should be a responsibility and a duty on the owners of buildings to audit their buildings, identify the asbestos and label it. That might improve maintenance. The fact that asbestos has been identified does not mean that it has immediately to be whipped out of a building. Provided that it is managed properly, it can be maintained safely until such time as it can be removed. An audit would certainly result in better maintenance. Such an audit would make it possible to have a public register of such buildings for the purposes of compensation.
When people are found at postmortem to have died from asbestosis, it is difficult to trace the workplace where they were in contact with asbestos. One of the security men who works in this place told me that his father-in-law was found to have died from mesothelioma cancer. As he had been a clockmaker all his life, it became extremely difficult for him to establish a claim for benefit because he had to prove that he had been in a workplace where there had been asbestos. It took 18 months to get the appeal board to accept that he had worked somewhere where he had been exposed to asbestos, despite the fact that he died from mesothelioma cancer. Under those circumstances, setting a common law damage claim on its feet is almost impossible.
I am aware that there has been a consultation document on the subject. Will my hon. Friend the Minister ask the Health and Safety Executive to expedite the matter to give people access to a register? More importantly, I note that, last year, something like 1,350 postmortems reported mesothelioma as the cause of death. There must be an accessible register of workplaces that have asbestos in their structure.
My hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) referred to the pressures brought to bear on workers. October this year saw the 21st anniversary of the Safety Representatives and Safety Committees Regulations 1977. The TUC estimates that there are more than 200,000 workers, safety representatives. They are appointed wherever there are

recognised trade unions. That is important for the package of rights that my right hon. Friend the Secretary of State for Trade and Industry is steering through. The extension of trade union recognition will give an opportunity for the appointment of safety representatives in more workplaces, which is a very important step.
The enormous amount of work done by workers' safety representatives is one of the major reasons for the reduction in accidents over the past 20 years. The TUC's survey of the statistics shows that companies that have appointed safety representatives and have joint union-management safety committees have 50 per cent. fewer accidents than those which do not have the same procedures. That shows the benefit of having safety representatives. As my hon. Friend the Member for Wolverhampton, North-East said, increasing the number of safety representatives would remove some of the pressure and fear for their jobs that people feel if they raise safety issues, because the worker would be able to raise the point with the safety representative, who could then take it up with management and ensure, through the safety committee, that positive action was taken.
I accept that the structure of British industry has changed in the past 20 years. Gone are the larger units of production. There are more small and medium enterprises, employing an increasing proportion of the population. There is often no trade union organisation and management has little access to information about health and safety. I should like my hon. Friend the Minister to direct the Health and Safety Commission to work with the TUC and industry to devise a system of roving safety representatives who could be on hand to provide advice to small and medium enterprises. I should also like him to ask the Health and Safety Commission to carry out a study on the impact of extending the rights of safety representatives. If we gave safety representatives the right to stop the job and serve enforcement notices, as safety representatives in Sweden and Australia can, management would not have the opportunity to sack a worker who dared to raise a problem about safety on the shop floor.
Although we have stringent regulations on the issue, the reporting of accidents in the mining industry has caused the mining unions a great deal of concern. They have long argued that there has been massive under-reporting. The National Association of Colliery Overmen, Deputies and Shotfirers, which is the safety union in the industry, says that there is clear evidence that there was massive under-reporting from 1988 until recently. The Health and Safety Executive has taken that on board. I raised the matter in June during business questions, when the HSE had issued a document that showed clearly that there had been under-reporting in the mining industry. The frequent failure to include accidents that cause an absence of three days or those that occur during weekend working has skewed the statistics.
The constant pressure brought by NACODS on the issue resulted in the publication in June of details of the Health and Safety Executive's audit, which showed that there had been 52 per cent. under-reporting. NACODS contends that the figure is greater—as high as 300 per cent. NACODS rejects the HSE's excuse. I understand that the general secretary of NACODS was told by the chief executive of the HSE that 52 per cent. under-reporting of accidents is normal. The unions do not accept that, and neither do I. I accept that there is bound to be some under-reporting, but for a figure of 52 per cent. to be accepted as normal is excessive.
When accidents are not reported, there is no follow-up, which means further accidents that could have been avoided. It is very important that we ensure rigorous reporting of accidents. Last week, the HSC, perhaps as a result of the pressure that I have referred to, issued a consultation document, "A Duty to Report Accidents". I hope that my hon. Friend the Minister will impress on the HSE the need for an overhaul of accident reporting in a framework that will allow the creation of prevention strategies. The HSE should be reminded of that, because we must have follow-up procedures from which further strategies can be developed that will prevent further accidents.
I want to finish where I started, by welcoming the higher priority given by this Government to health and safety. There is still much to be done. The 18 years of Toryism worsened health and safety provision. The Minister could signal a new determination, in the context of the higher priority given by the Government, by making it clear to industry that he will be pressing for higher fines and sentences for health and safety offences.

Mr. David Chidgey: I, too, congratulate the hon. Member for Barnsley, West and Penistone (Mr. Clapham) on securing this debate. As he has demonstrated, health and safety at work is a very wide and diverse issue. I shall concentrate on just three areas in order to allow other hon. Members to contribute to the debate.
Far too many people are killed or injured in the workplace. Greater effort must be made to improve health in the working environment. Let us take the construction industry as a case in point. Hon. Members will know that I spent much of my working life as a consulting engineer in that industry, so I speak with some experience when I say that it still has one of the highest fatality rates.
The Minister, whom I congratulate on his appointment, may be aware—these may be cross-departmental concerns—of the important progress of the introduction of roll-over protection structures regulations. The fitting of ROPS make construction plants safer. I welcome the measure; they will save lives and reduce injuries. The Minister may, however, be aware that, although industry welcomes the measure, too, it has concerns. That is particularly so in my constituency, which has a high concentration of plant-hire firms.
The industry has raised concerns about the timing and implementation of the new regulations. There is no question but that they are important. Not a single life should be lost through unnecessary delay in their implementation. The Minister may be aware of industry claims that equipment manufacturers have nowhere near enough capacity to supply the conversion kits that are necessary to modify all plants in time to meet the new standards when the regulations come into force. I am in no position to give a view on whether that is so.
The Minister may argue that the introduction of the new regulations has been signalled for some time. The key issue is when the United Kingdom regulations were drafted. What guidance was industry given on the UK version of the European regulations so that it could make precise arrangements to meet them? What assessment

have Government officials made of the industry's capacity to meet the demand for conversion kits? What assessment was made of the lead time to supply the kits in order for the industry to be able to comply with the regulations? The Minister may not be able to reply today; perhaps he will later. We need answers to those important questions.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Alan Meale): I assure the hon. Gentleman that I am aware of all concerns in the industry. In fact, next week—I think—I am meeting another hon. Member and representatives of the industry in my office. I invite the hon. Gentleman, too. I am aware of the serious concern, but I think that there are ways in which we can get round the difficulties.

Mr. Chidgey: I am very grateful to the Minister for replying so promptly. I very much hope to be able to join the delegation in his office. I should like to establish whether he is satisfied that there has been sufficient consultation, assessment and planning. We need to consider such practice for future models. We must ensure that new regulations can be introduced sensibly and effectively. If the Minister is satisfied, it could be argued that the industry is being disingenuous, which I hardly think is the case. There is a genuine will by all parties to improve safety in construction.
Health and safety at work has come a long way since we began introducing kicker boards on construction sites and insisting that hard hats were worn. Health and safety science extends well beyond immediate concerns, such as accident investigation and reporting, on which the hon. Member for Barnsley, West and Penistone commented. It has gone well beyond the compilation of exposure limits for hazardous chemicals. Long-term research is essential in order to anticipate potential risks of changing work practices.
In the past—even today—we have been concerned with accidents in mines and on construction sites. Now, new risks are associated with working practices in the electronic office, such as the rise in the number of upper-limb disorders. A new area of risk in the workplace, and to the public at large, is associated with emerging technologies, such as genetic modification. The Minister will be aware of public concern over the release and marketing of genetically modified organisms, and perhaps of calls for a total ban on them—or, at the very least, a moratorium on their introduction into the food chain.
The Minister may also be aware that, in 1995, the Health and Safety Commission's advisory committee on genetic modification published a report entitled, "Genetic Modification—Risks and Safeguards". What action are the Government taking in the light of that report? I appreciate that the Minister has not had notice of the question, but I would like an answer. What progress is being made on a rational assessment of the risks to the public of introducing GMOs into the food chain? When do the Government expect to be able to introduce sensible, pragmatic, and above all, risk-free regulations to protect and preserve public safety?
Several key areas must be addressed across this wide-ranging issue. I hope that I have made it clear that everything from the implementation of improved safety measures in the construction industry, to better understanding of risk assessment, the duty of care in the


workplace and electronic office, and scientific developments in food needs to be addressed within the remit of health and safety.
I conclude by reinforcing, to a degree, some of the points made by the hon. Member for Barnsley, West and Penistone. It is especially important that companies which breach health and safety law face penalties that recognise the gravity of the offence—indeed, imprisonment, where the offence is serious enough to warrant it. Far more needs to be done to impress on employers their responsibilities in the workplace. Employees should be empowered by having responsibility for monitoring and improving working conditions. They should be able to refuse to undertake unsafe work without suffering social security penalties, such as the withdrawal of benefit. The Health and Safety Executive must be properly staffed and funded in both a policing and advisory role. I hope that the Minister will respond to some of those points.

Mrs. Ann Cryer: The subject of this important debate could have a profound effect on the lives of very many of our constituents. I shall concentrate my comments on the dangers of asbestos.
My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) mentioned that, in April, my hon. Friend the Member for Tooting (Mr. Cox), as rapporteur of the Social, Health and Family Affairs Committee of the Council of Europe, of which I am a member, compiled a report, "Dangers of asbestos for workers and the environment". I should like to quote from the summary of his recommendations.
Ever since the health dangers of asbestos were discovered in the 1960s and there was widespread concern, many countries have introduced regulations on asbestos use, disposal and removal. However, these measures, though sometimes stringent, are not enough to eliminate all risks.
The report therefore advocates that legislative action for a total ban would be the only effective solution to this problem in the medium-term.
The summary also encourages further research into asbestos substitutes, and finishes by saying:
Even if the use of asbestos were to be eliminated in Europe, the problem remains … in other countries, especially within the Third World, and this requires special measures on the export of asbestos-containing products.
The report was eventually approved after a long and heated debate for which many amendments—22, I believe—were tabled by the Russian delegation because of their vested interest in the production of chrysotile, or white asbestos, and in the teeth of a great deal of lobbying behind the scenes by the Québecois members of the Canadian Parliament, who hold observer status at the Council of Europe. Again, their opposition was due to vested interests in the production of chrysotile.
I put on the record my appreciation of the work that my hon. Friend the Member for Tooting did on the report, and of the enormous help that the GMB union gave with the research. I hope that our Government will take the recommendations on board.
I was unaware of the dangers posed by asbestos until, in the early 1970s, I saw a moving television documentary called "Alice—A fight for life", which told the story of Alice, who was brought up in a terraced house in Hebden Bridge in the west riding of Yorkshire. As a child she had

played in the streets with asbestos, making "snowballs". The asbestos had been emitted by Acre mill, nearby, and after a long and vitriolic legal struggle, Turner Newall—or Turners Asbestos, as it had been—eventually paid her compensation related to the asbestosis from which she died shortly afterwards.
In my constituency of Keighley, money is spent year after year by Bradford metropolitan district council, our education authority, on treating and removing asbestos from school buildings because it has become unstable, or because roof replacements, rewiring, refurbishment or other necessary repairs have exposed the substance. We have many children who enter school without English, and many more from extremely poor homes, so our education budget is constantly under pressure, and we would much prefer the money to be spent on the education of our children.
However, we do not have the luxury of choice, especially since the death of Shirley Gibson, a teacher who worked for the London borough of Greenwich. Shirley was 37 years old, and the coroner's inquest concluded that her death, from mesothelioma, was caused by being in contact with asbestos in her classroom.
Another story to hit the headlines in West Yorkshire, similar to Alice's story but very recent. is the tragic case of June Hancock. She died on 19 July last year, having won her claim for compensation against Turner Newall because she suffered from mesothelioma, also caused by playing in the streets with asbestos, this time near the company's factory in Armley, Leeds.
The campaign against asbestos waged by June and her supporters, together with other groups, including trade unions, may have saved the lives of children in the Birmingham area. Heightened public awareness led to the discovery of children playing with illegally dumped asbestos, and it was rapidly removed.
The cases that I have mentioned are those of women and children, who did not work in the asbestos industry or related industries, such as construction or car repairs, where the vast majority of cases of asbestos-related diseases are found. I have used those cases to bring the personal individual tragedies into the debate, rather than depending on exchanges of statistics.
I hope that, before too long, we shall see improved methods of detection and treatment for existing asbestos in buildings, and improved detection, treatment and care of those suffering from asbestos-related diseases, including those whose disease is as yet undetected or latent. I also hope for an eventual total ban on the use of all forms of asbestos, including chrysotile, because all forms of asbestos can cause asbestosis and lung cancer.
A Québecois representative at the Council of Europe said that white asbestos is safe if used correctly. Unfortunately, both the building industry and car repair workshops are notoriously difficult to monitor, not least because of low trade union membership.
Almost half of the European Union countries already ban all new asbestos, and I trust that we will soon follow them. To push the argument further, I will bore hon. Members with just a few statistics. In France, 2,000 people died from asbestos-related diseases in 1996; in the United Kingdom in the same year, 3,000 died from the same cause—there were 30 deaths in Sheffield alone—while in the whole of Austria, after a 20-year ban on all forms of new asbestos, the figure was 30, the same as Sheffield's, for the same period.
We already have alternatives to asbestos, and there may be room for improvements. If so, what better way to celebrate the millennium—which would conform to both Christian and Jewish teachings—than to convert some of our too many swords into the proverbial ploughshares? We could use a fraction of the enormous sums spent on research and development for means of destroying life, through weapons technology and methods of delivery, to find a means of saving millions of lives through the development of safe, efficient and affordable alternatives to deadly asbestos.
Finally, I thank my hon. Friend the Member for Barnsley, West and Penistone for calling for the debate, for his excellent contribution—especially what he said about whistleblowers—and for the sterling work that he has devoted to the subject over many years. With his help, and with that of others in this place and of the trade unions, health and safety at work has been, and will be, kept where it belongs, high on our political agenda.

Mr. Andrew Dismore: I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on securing the debate. I practised as a personal injury solicitor for 20 years, and coincidentally, I started in practice two weeks before the safety representative regulations came into force. I believe that I dealt with the first fatal accident under the regulations; tragically, it occurred during the small hours of the morning that the regulations came into force.
In my 20 years in practice, I investigated thousands of accidents, from the horrors of the tragedies of King's Cross and Zeebrugge to the more commonplace slipping, tripping and lifting accidents—including the bizarre, such as the accident in which the fire station where a firefighter worked burnt down. The vast majority of those accidents were avoidable with foresight, and would not have occured if the precautions eventually recommended had been undertaken at the time.
My hon. Friend described the cost of accidents to the country. I am concerned by recent press coverage, which has become judgmental, and tries to separate out deserving and undeserving accident victims, often on the basis of ill-informed and unfair comment. That does not help to instil the safety culture that we need in our workplace.
The best example is the apocryphal McDonald's coffee case in America, in which people criticised the lady concerned for claiming compensation. In fact, McDonald's had super-heated the coffee way beyond the temperature that would be expected in an ordinary kettle, and the lady suffered terrible third-degree burns. Those facts are rarely reported.
More recently, we have heard attacks on public sector workers for bringing compensation claims—yet we hear little comment on the health and safety record of the public sector in the fire service, the police service and the health service. There is much room for improvement there, but it gets little press coverage.
My hon. Friends the Members for Barnsley, West and Penistone and for Keighley (Mrs. Cryer) have described the new challenge for health and safety posed by the drive

for greater productivity. Speeding up outdated machinery and processes often results in accidents. I recently dealt with the case of a young man aged 16 who lost his fingers in a press. The machine was old and badly maintained, and the guard was faulty. The boy was under pressure to improve his productivity, and he lost his fingers. That illustrates the need for proper investment. When we talk about higher productivity, we must consider the consequences—consequences such as those that my hon. Friends have described.
The hon. Member for Eastleigh (Mr. Chidgey) talked about the risks associated with new processes. Thirty years ago, some of the risks of asbestos were known, but they were little publicised. The risk of industrial deafness was unknown, yet the thousands of claims now coming through show what tragedies took place, especially in shipbuilding and heavy engineering. The insurers may pay the financial price, but the real price is paid by the workers in their quality of life, and sometimes with their very lives.
Now we have new risks. The hon. Member for Eastleigh mentioned some of them. There is repetitive strain injury and eyestrain caused by keyboards and screens, and all sorts of additional stresses that we are starting to notice. The increasing use of chemicals will have unknown consequences. We must be on our guard against such future risks.
The new safety challenges have brought new safety regulations, through the European Union directives of a few years ago—the so-called six-pack. That introduced the new concept of risk assessments. Much lip service is paid to risk assessments, but they may not be done properly. Perhaps the best example is in the manual handling regulations, where the first step in the risk assessment should be to determine whether the lifting operation is necessary or could be avoided. That often becomes the last question, rather than the first.

Mr. Chidgey: Does the hon. Gentleman agree that, although the concept of duty of care and risk assessment is a major step forward, little has yet been done to monitor the effectiveness of risk assessments?

Mr. Dismore: I agree with the broad thrust of what the hon. Gentleman says, and I would be sorry if the only way in which we could monitor effectiveness was through court cases involving people who had been injured through risk assessments not being done properly.
We in this House could also set a good example. I recently had an independent safety audit carried out on my constituency office, which produced a few things that I need to have done. We must also ensure that we comply with health and safety regulations when visiting factories or construction sites in our constituencies and more widely. I regret that a Conservative Member, whom I accompanied on a recent site visit to Portcullis house, was not complying with safety regulations because he refused to wear a safety helmet. I brought that to his attention at the time, and have done so subsequently.
My hon. Friend the Member for Barnsley, West and Penistone mentioned problems concerning safety regulations and the need for better enforcement. The regulations work by consent, and generally work well, but there are problems when they do not work. The big problem is enforcement, because regulations can be enforced only through the Health and Safety Executive or by the Attorney-General.
I dealt with a case involving the fire service a few years ago. It wanted to hold an exercise off-site in a derelict building of the sort that is torched for dramatic effect in "London's Burning". The union wanted to inspect the building to make sure that it was safe for the drills that were to be conducted, but it was refused access by the employers. We investigated the position and there was no possible way for the union to bring enforcement action to make sure that its legal rights were respected.
I should like my hon. Friend the Minister to consider whether we can have independent enforcement—perhaps by the trade unions, which would act responsibly—in cases where the HSE will not act, often because pressure of work means that it cannot conduct the vast bulk of the tasks that it needs to carry out.
The Health and Safety at Work, etc. Act 1974 contained major advances in health and safety in this country, and they were built on by regulations. Again, part of the problem—due to pressure of work on the HSE which is not alleviated, and no matter how much extra we put into it—is enforcement. There are new employment law rights to walk off the job if it is dangerous, and for safety representatives to stop work if it is dangerous, but they are difficult to enforce because there is always the fear of victimisation. I would like a system where not only the HSE, but workers and trade unions, could bring private prosecutions for breaches of the regulations in the most serious cases. That would plug the big gap in health and safety enforcement.
We also need to consider the definition of "worker", because a lot of the dodging of health and safety regulations has revolved around saying, "This person is not a worker; he is a self-employed contractor." Work practices are changing, so we must consider the definition of "worker" in respect of health and safety enforcement activities.
Accidents will inevitably happen, but we need to make sure that we are able to find out why. The victim is entitled to know why that accident happened, and to an apology from his employers, if it was their fault. A lack of such explanations and such information, including information released by the HSE, encourages claims. Injured workers want to find out what happened, and many of my clients have said to me, "I don't want this sort of accident to happen to someone else, and that's why I am bringing the claim." If action had been taken, and if explanations had been given, those claims may have been avoided.
We have problems of uninsured employers, and we should consider schemes to overcome them. We also need a register of insurers to enable employees who bring claims—for example, for asbestosis—to track down the insurers concerned and the records so that they can find out what happened.
With a Labour Government we have, as my hon. Friends have said, a greater commitment to health and safety. We have come a long way, but there is a long way to go. There is no room for complacency—the risks to health and safety are ever-present, and enforcement action is always expensive. We need to build on the great experience of trade unions and safety representatives in trying to tackle those problems.

Mr. Ian Stewart: I am pleased to be able to participate in the debate, and I congratulate my hon. Friend the Member for Barnsley, West and Penistone

(Mr. Clapham) on securing it. He is an assiduous and committed chair of the all-party group on occupational health and safety, of which I am a member. I also congratulate the new Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Mansfield (Mr. Meale), and look forward to discussing a number of health and safety issues with him directly.
Earlier this year, I was lucky to secure a half-hour Adjournment debate on health and safety representatives, and I should like to make a few follow-up points later.
Hon. Members have referred to the cost to industry of days lost through ill-health—£5 billion a year. In the recent debate on the working time directive, my north-west colleague, my hon. Friend the Minister of State, Department of Trade and Industry, reminded the House that the Confederation of British Industry estimated that £25 billion was lost to the economy in the last year of the Conservative Government due to unregulated absenteeism. The Health and Safety Executive's figures show that 500,000 workers suffer from stress and anxiety caused, or aggravated, by work.
I am proud that Labour's employment and industrial reforms will improve the benefits and rights of millions of workers in relation to wage levels, sick pay and holiday entitlement. I look forward to employee rights to representation being improved in legislation to implement the White Paper, "Fairness at Work". I believe that those measures will improve employees' financial and emotional well-being, but improved occupational health and safety provisions are essential, too.
Measures to improve the identification of work-related health problems, and to treat them effectively, are important. Stress management and counselling have gained vogue in recent years, but the HSE's own research shows that stress counselling is of little value. Jogging in the lunch break or line dancing after work may reduce stress, but will not tackle the cause.
As has been flagged up by my hon. Friend the Member for Hendon (Mr. Dismore), most Members of Parliament are employers of one or more full-time staff, or the equivalent. We must take responsibility for ensuring that we have regard to the occupational health and safety needs of our staff.
The HSE issues guidance on stress reduction, but a joint Transport and General Workers Union-university of Manchester institute of science and technology survey a few years ago sadly found it to be totally ineffective. The Trades Union Congress, trade unions and many other organisations want a specific workplace stress law that is enforced. I understand that the CBI is not in favour of that proposal, or even of a weaker HSE-approved code of practice on workplace stress. I hope that the Government will end that deadlock, legislate and make progress with all interested parties so that we can have measures that will be effective in reducing workplace stress. That would not only reduce human suffering, but cut national health service costs and improve United Kingdom productivity.
Earlier, I flagged up the issue of health and safety representatives. As a full-time trade union officer for 20 years, one of my key objectives was to raise employee awareness of health and safety issues. I believe that trade union-appointed safety representatives have a crucial role in that regard, and in taking up concerns with employers.
Many employees on short-term contracts—who are part-time and in small workplaces, or who may be getting older and are simply too frightened of losing their jobs—will not complain to their employer about hazardous workplaces. There are now 200,000 trade union-appointed safety representatives under the auspices of the Safety Representatives and Safety Committees Regulations 1977, but only 50 per cent. of the work force is covered by such representatives.
In my Adjournment debate in May, I asked the Government to consider the introduction of roving safety representatives, as there are in Sweden. The Minister gave me no commitment on that point, but said that the arrangements for health and safety consultation should be reviewed, and that that review should also consider how the role of such representatives could be strengthened. It was suggested that the Health and Safety Commission would carry out the review. I am concerned because I have heard through the grapevine that the commission and the Health and Safety Executive are still awaiting a referral from the Minister before they start the review. I hope that the new Minister will be able to confirm that such a referral is in hand.
Finally, I understand that, at the climate change conference initiated by the Trade Union Congress last week, a related question was put to the Deputy Prime Minister, who was asked to extend the health and safety responsibilities of trade union representatives to include the environment. I have heard through my efficient grapevine that he has agreed that that should be considered as part of the general review. I hope that the Minister agrees with him and I look forward to the review being established. I also hope that it will produce early proposals for improvement.

Mr. Bernard Jenkin: First, I join hon. Members in congratulating the hon. Member for Barnsley, West and Penistone (Mr. Clapham) on obtaining this debate. He spoke with knowledge and passion on his subject and raised a number of questions and we look forward to hearing answers from the Minister—questions about consultation with the Health and Safety Executive in the workplace, the future of asbestos and the HSE's role with regard to safety representatives in small and medium enterprises. The hon. Gentleman also wanted the Minister to impress on the HSE the need for a complete overhaul of accident reporting and follow-up procedures. I trust that the Minister will deal with those points and I shall not use this occasion to ask him about the health and safety of planning offices in north London, but will congratulate him on his appointment.
The debate has been extraordinarily one-sided. Of course, health and safety in the workplace are important, indeed, vital issues. The record of both the main political parties on health and safety is good and the Health and Safety at Work, etc. Act 1974 represented a consolidation of measures that had hitherto been adopted under Governments of both parties. Health and safety legislation has developed considerably since that date—many of the developments took place under the previous Conservative Government.
This Government inherited a Health and Safety Executive with 4,000 employees, which is about one for every 15,000 employees in the workplace and compares

favourably with the situation in most of our European competitor countries. One reason why the then Prime Minister Margaret Thatcher so favoured the Single European Act was because she thought that similar health and safety provisions to those that we were imposing on our industry should be imposed in other European Community member states.
The Labour Government inherited a good record. In the last 10 years of Conservative Government, the number of deaths in the workplace halved. In 1997, there were 249 fatalities, compared with 1,310 in Germany in the same period. So, we have a good record and a good Conservative tradition on health and safety. In debates, when Conservatives object to a health and safety measure, Labour Members often argue that we would still be sending children up chimneys, but it was a Conservative Government who introduced the law to stop that in the first place. Let us hope that we can consider this matter on an all-party basis rather than in such a one-sided way.
The hon. Members for Barnsley, West and Penistone and for Eccles (Mr. Stewart) mentioned stress in the workplace and how it causes absenteeism. Stress can be caused by low morale, low productivity and poor management, which are all concerns with which we want to deal as well as health and safety. However, nothing causes greater stress and unhappiness than being unemployed. People without jobs are generally much more stressed than those with them. The great danger of becoming over-enthusiastic about health and safety legislation is that we can create over-regulation. We can all think of wonderful new contexts for creating rules, but all parties must understand that there are limits to their reasonableness and that it is far more difficult to undo unnecessary burdens on business than to impose them.
We have had our share of ludicrous extremes; for example, the general thrust of regulations to control substances hazardous to health in the workplace was good, but we ended up with office workers having to keep a register of Tippex supplies as it was classed as a hazardous substance. That is a case of taking health and safety regulations to extremes.
The gold plating of European Community directives is an ever-present problem. The hon. Member for Hendon (Mr. Dismore) mentioned the manual handling directive, which gives no guidelines for the weights that it is safe for people to lift, so our civil servants had to invent some. One effect of the directive was to reduce the maximum size of a bag of plaster from 40 kg to 25 kg. Most people were capable of lifting 40 kg, but 25 kg is now deemed to be the safe weight and as a result many workers now carry two bags at once, which makes 50 kg. The regulation has not only been costly to the industry, which had to re-tool to enable it to fill the different size bag with plaster, but has turned out to be counter-productive, as it has encouraged people to carry heavier weights.
The health and safety at work regulations of 1993 were intended to reflect an EC directive and require written risk assessments. There has been much talk of such assessments, but the bureaucracy of every business having to undertake them, when they might not obviously and instantly be necessary, underlines how we have added bureaucracy and burden to industry. The deregulation task force was designed to deal with such


excesses, but had hardly begun its work before the new Government were elected and decided to change it for a better regulatory task force.
There are plenty of examples of absurd regulation and of matters being taken to an extreme. One case concerned a boy who used to earn £20 a week helping a milkman. That was stopped when the milkman received a warning letter from the local authority telling him that he would be fined £1,000 if he did not stop employing the boy. In another case a man was refused a job because he was too tall. The basis of the decision was concern for his back because of the health and safety regulations, but he won his case of unreasonable dismissal on the basis that men are taller than women and therefore it was sexual discrimination. The danger of over-regulation is that it is a feast for the lawyers, such as the hon. Member for Hendon, but costs everyone else a great deal of money.
The sick leave bill for the public sector, which is about £3 billion a year is not helped by the fact the Occupational Health and Safety Bureau has one of the worst records.
The working time directive, which we debated earlier this session, is another example of excessive regulation. It is completely alien to the British traditions of freedom and voluntarism in the workplace and will add up to £2.3 billion to business costs. Once again, the regulation has been gold plated. As is inevitable, United Kingdom officials and courts will fill in the gaps in its drafting. The regulations are complex, imposing a huge administrative burden, which will affect some industries much more than others, in particular temporary and seasonal industries.
Will the Minister tell us how the case law of the working time regulations can be prevented from spreading to industries for which they were not intended? At the moment, the transport industry is excluded. The train driver is certainly excluded under the regulations, but what about catering staff on a train? Are they covered if they are employed by the railway company and do they remain covered if they are employed by a sub-contractor? Where is the certainty in regulations that are vaguely drafted?
The directive does nothing for the United Kingdom's competitiveness. It imposes huge costs and will curtail flexible working and harm job creation; it is bureaucratic and will encourage the black economy. Moreover, there was no real demand for it.
Do the Government recognise that the sheer volume and detail of much health and safety regulation represents an unreasonable burden on many businesses, particularly small businesses? What procedures do the Government have for assessing risk in the workplace, as the costs of regulation are so often out of all proportion to the risk? What will the Government do about the gold-plating of EC regulations and directives? Now that the Government have given up the United Kingdom's veto in social chapter matters, which are subject to qualified majority voting, how will they prevent the imposition of costly so-called health and safety regulations, such as the extension of works councils to small businesses?
The Conservative party is in favour of proper health and safety regulation. However, excessive regulation has rightly been described as a form of hidden taxation. Everyone wants a safe workplace—safe workplaces are in the interests of the economy as a whole—but a balance is needed, and that is far from being achieved.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Alan Meale): I, too, congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on securing this debate and I thank him for his kind remarks. I listened with considerable interest to his thoughtful contribution and to those of other hon. Members, including the hon. Member for Eastleigh (Mr. Chidgey) and my hon. Friends the Members for Keighley (Mrs. Cryer), for Wolverhampton, North-East (Mr. Purchase), for Hendon (Mr. Dismore) and for Eccles (Mr. Stewart). I also mention my hon. Friends the Members for Bolsover (Mr. Skinner) and for Midlothian (Mr. Clarke), who had to leave the Chamber to attend another meeting. I share my hon. Friends' concerns, which reflect many of my priorities.
The Government are firmly committed to high standards of health and safety in the workplace. The hon. Member for North Essex (Mr. Jenkin) may have claimed that the Conservatives stopped people putting children up chimneys, but it is fair to say that the Government are prepared to give health and safety a higher priority than our predecessors did.
The Health and Safety Commission and the Health and Safety Executive, which were established under the Health and Safety at Work, etc. Act 1974, have stood the test of time over the past 25 years. They have played a pivotal role in improving standards of health and safety in the United Kingdom, whose record is among the best in Europe.
The Government are far from complacent, not least because, in recent years, the UK's health and safety performance seems to have reached a statistical plateau. We need to put that across, if only as a way in which to achieve even better standards. We want the HSC and the HSE to be strengthened and given the resources that they need to be even more effective.
As my hon. Friend the Member for Barnsley, West and Penistone said, the most important issue is that of resources. In the current financial year, we provided an extra £4.5 million, restoring the cuts inflicted by the previous Government. Those resources have been targeted on inspection and enforcement by the executive, which is particularly important, as 75 per cent. of health and safety inspectors are on site during their working week. We have recruited 58 new inspectors and are in the process of recruiting a further 126. I shall also shortly be announcing a further and significant increase in resources for the commission and executive under the comprehensive spending review. I cannot yet give the exact figures, but the increase will be good news for health and safety.
I am keen to focus the health and safety agenda on areas that matter to people. The hon. Member for Eastleigh mentioned genetically modified organisms. The Government have announced the formation of a Cabinet Committee on biotechnology, to be chaired by my right hon. Friend the Minister for the Cabinet Office. I acknowledge the hon. Gentleman's concerns on this complex subject, which the Government are dealing with through that Committee.
My hon. Friend the Member for Barnsley, West and Penistone mentioned violence against staff. The Government made it clear in their human resources strategy for the national health service that violence and


aggression against staff will not be tolerated. That strategy is essential, as recent figures show that NHS staff are three times more likely to be attacked than members of the public. In June 1997, the NHS executive issued guidance to NHS trusts on dealing with violence as any other health and safety risk.
In December 1997, my right hon. Friend the Secretary of State for Health and the chairman of the Health and Safety Commission launched the Health Services Advisory Committee guidance on the assessment and management of the risk of violence to staff in the health service. The guidance sets out a framework for action covering a range of control measures, including hardware and physical aspects of the premises, working patterns and practices, staffing levels and competence, training and the means to deal with accidents. It applies not only to hospitals, but to primary and community care, nursing homes, mental health and ambulance services.
The national plan of work for HSE inspectors identifies violence to staff as a key issue to be dealt with during in-depth inspections at hospitals and NHS trusts. HSE inspectors are prepared to enforce the necessary standards, as is shown by the fact that more than 30 notices on violence have been served in the health services since April 1996.
The health of people at work is a key element in the Government's strategy for public health. Far too many people suffer from ill health caused, or made worse, by their work. A recent survey suggested that 2 million people were affected, so an improvement in occupational health standards needs to be a top priority.
The HSE recently issued a discussion document on an occupational health strategy for the next 10 years. As hon. Members know, the Government are already addressing specific occupational health risks, including work-related stress and violence. We recognise that such problems are very distressing to those affected.
We are determined to ensure that work-related violence is tackled effectively. I am seeking advice from the Health and Safety Commission on what can be done on that

issue, about which I feel particularly strongly. The HSE is exploring how best to tackle the matter through a committee involving Departments, the TUC, the Confederation of British Industry, the Federation of Small Businesses, Victim Support and, of course, the Suzy Lamplugh Trust. The Cabinet Office women's unit is also developing a strategy.
My hon. Friend the Member for Barnsley, West and Penistone chose an appropriate day to mention stress, as today is international stress awareness day. It is estimated that 500,000 people suffer from work-related stress, anxiety and depression. My hon. Friend rightly drew attention to the scale of the problem, which the CBI estimates to cost between £7 billion and £9 billion a year; it is also estimated that businesses pay out about £300 million a year in compensation claims. I recently launched HSE guidance on work-related stress aimed specifically at small firms. Moreover, the HSE will campaign to ensure that work-related stress is regarded as a legitimate health and safety issue. The HSC will shortly be considering the feasibility of an approved code of practice.
Of particular concern to many people are the stresses of bullying and harassment.
Bullying is totally unacceptable and is strongly condemned by the Government. I assure my hon. Friend the Member for Barnsley, West and Penistone that we are consulting further on the problem and that I will keep him informed of developments.
Many hon. Members have expressed concern about asbestos. I pay tribute to my hon. Friend the Member for Tooting (Mr. Cox), who has been deeply involved in trying to find a solution. The Government's desire is to tackle new occupational health risks, and we have given a clear commitment on that, but we are also determined to tackle the appalling legacy of asbestos. The Health and Safety Commission has recently held consultations on a package of tougher measures to provide better protection for those who may be exposed to asbestos at work.
I will continue to keep hon. Members informed of developments, and especially my hon. Friends the Members for Barnsley, West and Penistone and for Tooting.

Police (Community Relations)

11 am

Dr. Vincent Cable: A great deal has happened since our annual debate on the Metropolitan police: notably, the Lawrence inquiry and the Government's response last month concerning ethnic minority balance in the police. It is extremely important for Parliament to have an opportunity to review the issues. The fact that we are having this debate reveals the lack of suitable accountability for police matters, especially in London. I hope that that will be remedied in due course by the new structure of London government.
Events surrounding the Lawrence inquiry are in many ways the starting point. We await the findings, but what has already happened has been immensely powerful. Those of us who attended the inquiry found it very moving and influential. There was an enormous emotional impact on the audience and on the police. I congratulate the Home Office on moving quickly, but, unfortunately, other cases, such as the Menson case, are now coming into view.
The issue of racism and the police has been around for a long time—the Scarman inquiry occurred nearly two decades ago—and there is a danger of our relapsing into weary cynicism and saying that the problems will always be with us. Racially motivated whites and more cynical blacks will say that nothing can or will be done, but that is quite wrong.
It is important that we note how much the context has changed. Anyone from an ethnic minority or with a racially mixed family background will know that there has been a big change over the past two decades. There was a tremendous climate of fear in the late 1960s and early 1970s, with the Powell speeches, the marches and their aftermath. There was a fear of riots after every Notting Hill carnival, but the atmosphere at the carnival has now changed: there is great self-restraint on the part of the police and the participants, and the management is much more professional. Many people from ethnic minorities are doing well in the education system and the professions. But we also now have a second or third generation of people who will not in any circumstances accept second-class treatment, humiliation, discrimination and insult. The police, too, have moved on, but not as fast. Many who joined the police two decades ago did so in an environment with a different culture and much lower expectations.
The police are criticised for sins of omission and of commission. Sins of omission include the failure adequately to understand the extent to which ethnic minorities are victims of racially motivated crime. My hon. Friend the Member for Sheffield, Hallam (Mr. Allan), who is my party's spokesman on these issues, will develop the subject in more detail, but it is worth while sketching the key point that Home Office statistics show that, in any one year in Britain, 4 per cent. of black people, 8 per cent. of Bangladeshis and Pakistanis and only 0.5 per cent. of white people are likely to have been victims racially motivated attacks.
Those may seem low figures, but over 10 years they mean that roughly half the ethnic minority population will have been on the receiving end of a racially motivated attack. I have been trying through parliamentary questions to establish the underlying trend. I had a helpful answer

from the Home Office in April, suggesting that racially motivated incidents—which are not the same as assaults, but comparable—have increased by about 40 per cent. in the past five years. That may be partly because of improved recording or greater openness about disclosure, but it suggests a worrying rising trend. Surprisingly, the increase in incidents is most marked not in inner cities—apart from the east end of London—but in outer suburbs, such as the one that I represent. Black and Asian people in London feel that they are the victims of racial attacks and that the police are not sufficiently sensitive, aware or willing to react quickly. That is the origin of the Lawrence and Menson cases.
Bias is one of the sins of commission of which the police are accused. The statistic that is always cited is that young black Londoners are eight times more likely to be stopped and searched than whites. I know that that is a headline figure, that glosses could be put on it, that academic research shows that the story is complex and that the police are monitoring the situation carefully, but it is a striking figure.
Most of us will have heard from friends or constituents about the experiences of perfectly law-abiding black and Asian members of the community. One often sees black drivers of flash cars surrounded by police who have stopped them to look at their particulars. My noble Friend Lord Dholakia has a rather generously endowed saloon car. He reports being stopped on several occasions, culminating in being stopped by the police when he was on his way to address chief constables at a conference on the police and race. After several hours of embarrassment, he had to be given a motor cycle outrider escort to get him there in reasonable time. The police themselves are increasingly aware of such problems, but those problems continue to create enormous discord and resentment.
The Commissioner of Police of the Metropolis and other chief constables have had to consider whether they should acknowledge a phenomenon known as institutional racism. I have thought about the matter at some length, and I do not think that it is merely a semantic quibble. I think that the Commissioner is right not to go down the route, followed by the chief constable of Manchester, of accepting that institutional racism is endemic in the police. He is right to acknowledge that there are severe shortcomings, but to admit institutional racism is to send a signal that all police are racist, which cannot be helpful either for the integrity and morale of the police or for public confidence; nor is it correct.
The police have acknowledged that there are unacceptable practices. One of those is stereotyping, which not only is bad in itself, as a manifestation of prejudice, but leads to serious misjudgments. One of the clear lessons that has already emerged from the Lawrence inquiry is that the police were completely thrown when confronted with a middle-class black family with professional aspirations and a son who was academically gifted and wanted to go to university. They made all the wrong assumptions when initiating their inquiry.
The police must also acknowledge, and stop, the practice of supervising officers turning a blind eye to racist language, expressions of prejudice and the so-called canteen culture. It is widely known to exist in the police force as it does in all sections of the community, but supervising officers must ensure that it is not tolerated.


Whether it is called institutional racism or something else is not central to the issue, but it is important that the deficiencies are acknowledged and dealt with.
I shall deal now with solutions and the way forward. There is clearly a time and a place for retrospective inquiry, but the key test is what is now done. The first issue to address is whether any advantage is served by demanding that senior heads roll in the police force. Some people argue that it would help to alleviate the present situation if the Commissioner of Police of the Metropolis were to step down. As in the case of institutional racism, I do not believe that such a token gesture would be appropriate. I do not know the gentleman concerned well enough to judge his professional abilities, but a token PR gesture would not be helpful. The Lawrence inquiry will produce recommendations as to who is ultimately responsible, but resignation is not the way forward. The Commissioner has made some significant improvements in police practice and should be given an opportunity to see them through.
The key to the problem is recruitment, and the Government have recently made a strong statement on that matter. We start from a striking disparity, certainly in London, between the ethnic minority population, of some 20 per cent., and its representation in the police, which is about 3 per cent. The situation is changing at the margin, because some 6 per cent. of recruits are from ethnic minorities, which is a sign of improvement. It is right that the number of ethnic minority policemen should not mechanically reflect their share of the population, but it should approximate to it and be seen to do so. The ethnic minorities should also be represented at all levels in the police, although I recognise that the issue is not a straightforward numbers game. It is important that ethnic minority police officers are seen to be promoted on grounds of ability and merit, and not simply for token reasons.
It is also important that we consider the context in which police recruitment takes place. I get a sense from talking to police officers and the Police Federation in London that the police face a severe recruitment crisis. The problems surrounding pay and conditions, especially housing, greatly affect the context in which recruitment takes place. It matters whether ethnic minority policemen are recruited into a force with high morale and where there is competition for places, or into a force that is demoralised and relatively easy to enter. It is the Government's responsibility to ensure that the context is correct.
A further area for change must be training. It is an old issue, which was raised by Scarman, but not much has happened since. I am told that training in London has been subject to economy cuts. Indeed, one of the most shocking facts to emerge from the Lawrence inquiry is that senior police officers did not get training in ethnic minority issues or even in murder inquiries. Corners have been cut in training, and that is causing considerable damage. I notice that the guidelines recently issued on training in the magistracy are sophisticated, useful and more advanced than those for the police. Perhaps lessons could be learned from that.
Changes are needed in disciplinary proceedings. Over past decades, there have been arguments about where the balance should lie in police complaints and disciplinary action. In the past, the assumption has always been that

one should lean in the direction of the police officer who faces an accusation because of the double jeopardy problem, but the present context, especially in London, means that a different approach is required. Indeed, the Commissioner of Police of the Metropolis has already demonstrated a willingness to take a much tougher and more open approach to complaints and subsequent disciplinary action.
My final point brings us back to the role of Parliament and the difficulties of establishing proper political accountability for the police, especially in London. It is striking that the Metropolitan Police Committee, which was established as a watchdog for the Metropolitan police, has been silent during the recent controversy. We have not heard a peep from it. Why does it exist? It should be acting as a shock absorber between the Metropolitan police and the public and politicians. Until the new structure of London government is established, that committee should undertake a much more active and politically aware role.
I thank the House for its indulgence and I look forward to the contributions of other hon. Members and the Minister's reply.

Mr. Clive Efford: I congratulate the hon. Member for Twickenham (Dr. Cable) on initiating this debate and I welcome the opportunity to discuss the issue, although we will need a more detailed discussion once the inquiry into the death of Stephen Lawrence and its aftermath has published its report. As hon. Members are aware, I represent the constituency in which Rohit Dugahl and Stephen Lawrence were murdered. I was not the local Member of Parliament at the time, but I was a resident and represented the council ward where the murders took place.
It is fitting to start by paying tribute to Mr. and Mrs. Lawrence, who have conducted themselves with exemplary dignity throughout the time since the murder of their son. Many of us, faced with similar circumstances, would not have been able to remain as composed as they have been, especially while being forced to watch the murderers of their son go free.
The effect of the murders on my constituency has been dramatic. In the years that followed Stephen's brutal murder, numerous reports have depicted Eltham as an area where black people exist in constant fear and racial attacks are an everyday occurrence. I would not wish to suggest that there are no racial attacks in Eltham or that no racists live in the community, but much of the criticism was caused by the myth of a wall of silence which thwarted police in their inquiries.
All those involved in the case of Stephen's murder, including those who were well informed, assumed that the investigation failed because of a wall of silence in the local community. That has been proved to be inaccurate and the report of the Police Complaints Authority, published last December, clearly demonstrated that the police were in possession of evidence that should have allowed them to make arrests within the first 24 hours following Stephen's murder. Evidence given to the inquiry—I shall not elaborate on it now, because we will have opportunities to do so once the report is published—also clearly shows that the police could have made arrests in that time. Unfortunately, the media continue to focus on Eltham based on that myth and are no longer interested in the facts.
The effect is to create an image that black people living in other areas do not have a problem with racism. No consideration is given to the effect on black people in Eltham. Many of the problems that they now face arise from the notoriety of the case, and racists in the area even feel empowered by it. Many local people are greatly concerned and I have initiated discussions among community groups to try to tackle the problem and examine the problems that black people face living in a predominantly white community. We must challenge the feeding frenzy that the media has had on race relations in Eltham.
In spite of the encouragement given to the racists by the manner of some of the media reporting, racial incidents are at a relatively low level in my constituency. I hope that this debate will begin to help people to understand that racism must be challenged everywhere, not only in Eltham. We must also recognise the crucial role to be played by the police in that process. We live in a multicultural, multiracial society and we have to strive for more awareness and greater understanding, so that people can appreciate another person's racial background instead of fearing it as a threat. Do we want to live in a society in which every parent fears that his or her children might be isolated and confronted by a group of people who just happen to have a different-coloured skin? Black or white, we all have a duty to address that issue. To fail to do so would be to gloss over the problem. We must accept that the problem is not just in the police, but in the whole of society. The police force merely reflects the community from which serving officers are drawn.
I do not accept Sir Paul Condon's statement that there is no institutional racism in the police. Most black people would say that that accusation can be made accurately against virtually every institution that is almost exclusively white. It would be remarkable if there were no racism in the police. Racism, in whatever form, exists in the police force because it exists in our society. The minority of police officers who are racist harboured those feelings when they went in; it was not a matter of their becoming racist because they had joined the police. Sir Paul Condon should not regard recognition of that fact as a personal failing on his part. Nor should it be seen as an attack on each individual police officer. Only when we recognise the symptoms can we begin to address the problem.
Some may ask whether there is a problem. I believe that there is. The 1997–98 report of the Commissioner of Police of the Metropolis includes figures on the use of police powers under the Police and Criminal Evidence Act 1984, giving the number of people searched and the number arrested as a result. Of the total of 336,692 searches, 41 per cent. were non-white. Non-whites make up 20 per cent. of London's population. Of those searched, 26 per cent. were black and 9 per cent. Asian. The arrest rates do not justify the disproportionate attention paid to those sections of the community. The arrest rate among the white community was 11.26 per cent. Among the black community, it was 11.65 per cent. and among the Asian community, 9.14 per cent.
Similarly, under the powers of the Criminal Justice and Public Order Act 1994—an Act used in anticipation of serious violence—a total of 3,992 people and vehicles were searched, of which a staggering 2,681 were Asian, while 653 were black and 554 white. Some 83.52 per cent. of persons arrested in anticipation of serious violent crime

were black or Asian. The Metropolitan police were kind enough to try to explain the figures, giving me an area-by-area breakdown. I shall not give the detailed figures, but they pointed to serious problems with policing in specific areas, and to the unjustified use of powers to intimidate one section of the community.
Scotland Yard commissioned a working group, including representatives of the Commission for Racial Equality, the National Association for the Care and Resettlement of Offenders and the Home Office, which concluded that there was wide variation in the application of powers between ethnic minorities. The group concluded that only 10 per cent. of searches resulted in arrests, and that black people were four times more likely than whites to be stopped. Those are national figures; I accept that the hon. Member for Twickenham has figures suggesting that black people are eight times more likely to be stopped in London, but nationally an innocent black person is four times more likely to be stopped by the police than an innocent white person.
A recent report by Statewatch—"Stop and Search and Racism"—strongly supports the allegation that black people are subject to discrimination in the use of those powers. The Stephen Lawrence inquiry has demonstrated the crucial role of the police in race and community relations. It is up to hon. Members, and others, to ensure that institutions such as the police set standards for others to follow. To achieve that, we must have transparency, and complete statistics for effective monitoring.
Police forces have done a lot to increase racial awareness among officers, and that must be applauded. The racial incident unit at Woolwich police station is an example of best practice. There is great determination in the police to tackle racism, and that must be encouraged. However, those who seek to drag their feet over any of the recommendations of the Lawrence inquiry should know that that will not be tolerated. Action must be taken.
A strategic review of national police training is due to report early next year, and I hope that it will be able to consider the report of the Stephen Lawrence inquiry before it does so. Can the Minister confirm that it will? Police racial awareness training needs to be thoroughly reviewed so that its effectiveness can be assessed. Vetting of candidates to become police officers also needs to be introduced. I have been unable to find a single example of a police recruit being dismissed by the Metropolitan police because of inappropriate opinions regarding race. We all know that racist police officers exist, and those officers who are determined to serve the whole community have their jobs made more difficult by our failure to protect them from such individuals, and from the canteen culture.
The community has a right to demand that the police exhibit exemplary behaviour and attitudes towards racial awareness. We all grew up in an era in which the police were held in high esteem. A police officer was someone whom young people were encouraged to look up to. Few people would put the police in that category today. We must begin to restore the confidence of the whole community in the police if we are to begin to eradicate racism from our society.

Mr. Andrew Robathan: The debate has so far been about the Metropolitan police, and I well understand the concentration on the Lawrence inquiry.


However, I wish to speak about Leicestershire police. I have just completed the police parliamentary scheme, as has the hon. Member for Birmingham, Hall Green (Mr. McCabe). I did mine with the Leicestershire police, and I found it extremely illuminating. The scheme would offer a valuable opportunity for members of the Select Committee on Home Affairs to experience what happens in the police—both good and ill. I worked with a large number of officers in Leicestershire, some of whom were Asian or black, although the majority were white. My overriding impression is that they were employed because they were good police officers. They were there on merit.
Recruitment is much remarked on. In Leicestershire, more than 4 per cent. of the force comes from the black or Asian communities. Approximately 9 per cent. of the population of Leicestershire as a whole come from ethnic minorities. The county has, I believe, one of the highest proportions of black and Asian recruits, although this year, sadly, not one ethnic recruit has passed through the training. Some joined, but they did not succeed. I asked the chief constable on Friday what could be done about that. He told me that there was a recruiting department and a recruiting officer who specifically tries to encourage ethnic minorities to join the police force. The officer goes two steps further with ethnic minorities than would be gone with other groups. He promotes the force as a good career, using Asian radio stations, local ethnic minority magazines and visits to colleges. There is a recruiting stand at functions at which there are large gatherings of ethnic minorities, particularly employment fairs. The officer goes as far as he can to encourage people, but he cannot compel them to come in off the highways and byways to join the police.
The hon. Member for Eltham (Mr. Efford) spoke about a canteen culture which deters good people from ethnic minorities from joining the police. There has certainly been such a culture among the police. I remember working with the Royal Ulster Constabulary 10 years ago, and some of what I heard made my hair stand on end, despite the fact that no one has ever accused me of being lily-livered or liberal. The same was true of the Metropolitan police 12 years ago. I hope that things have changed there, and in the RUC, as they have in Leicestershire.
Let me tell one story about Leicestershire that suggests that there is no canteen culture there to deter good people. In about 1993, the chairman of the police authority in Leicestershire, Baljit Singh—presumably of Sikh extraction—was a Labour councillor. He resigned as chairman and as a councillor. He then joined the Leicestershire police, where he is now a sergeant. From his position as chairman, he certainly did not see a culture that deterred him from joining the force.
I worked with officers at all levels during my four weeks at Leicestershire, and I learned the interesting lesson that racism was not an issue. I worked in Highfields, predominantly an Asian area in which the few white people are the minority. We talked to Rastafarians who had convictions for pushing drugs. There were suspicions that one or two might have been pimps. They had not been convicted for that, but it seemed that way. We talked to whites who were criminals. We dealt with the victims of crime—both Asian and white people. It seemed to me that the police officers made no

distinction—they really did not in what I saw of them—between people of different races. Certainly, the Asians with whom I dealt seemed to have total confidence in the police; they turned to the police when they wanted help.
Leicestershire makes great play of community relations. I visited a large school in Leicester called Moat community college, where the white people are the minority ethnic group. The headmistress is an Asian—Freda Hussain. I was very impressed by everything that she said. She certainly was not anti-police. She had her criticisms, but she was very much on the side of the police. The police inspector with whom I went to school was very much on her side, as he tried to run a good relationship with the school and the large number of young people there.
The Leicestershire police are working at race relations. They make a tremendous effort and, from what I saw, their strategy seems to be working. They set up the first—it may still be unique—police advisory group on race issues, or PAGRI. The group includes members of the local Commission for Racial Equality, community leaders and others involved in race relations. A steady and sensible policy has been produced. I pay tribute to all involved in that. Race seems to have been deflated as an issue both among the police and within communities.
I found decent people of whatever colour working as police officers and trying to do the best job that they could in difficult circumstances. Of course there are problems of race relations, as there are in other sectors, but the last thing that Leicestershire or any other force need is a quota. I have to say that targets are very close to being the first cousin of quotas. The hon. Member for Twickenham said much the same thing. He said that we did not want mechanically to reflect the exact make-up of a community. It may be that the proportion of police officers from the ethnic minorities could be higher than that in the community, but that is to be encouraged.
I was disturbed to hear the Home Secretary say that heads would roll if improvements were not made. As the chief constable of the Leicestershire police said to me, what is he to do if he cannot compel people to join the force? Quotas would be insulting to the excellent officers of all ethnic backgrounds. As the hon. Member for Twickenham, with whom I might disagree on one or two things, said, suspicion would inevitably arise that someone had been promoted because of his or her colour. That would be a terrible thing and it would be an insult to the good black and Asian officers in Leicestershire and elsewhere.
What I saw in Leicestershire sets an example to other police forces. Certainly the Met has its problems. I learned something about good race relations, and I congratulate all officers in that force on their sensible and positive attitude.

Ms Jean Corston: I congratulate the hon. Member for Twickenham (Dr. Cable) on his success in securing today's debate on an extremely important subject. It is timely for me because the Lawrence inquiry is sitting in Bristol this week. One of the purposes of that is to learn from some of the pioneering work that has been done in Bristol to further the interests of community relations in our city, which has a troubled history. The riots that led to the Scarman report happened in Brixton,


but also in St. Paul's in Bristol, which is in the constituency of my hon. Friend the Member for Bristol, West (Valerie Davey). My constituency of Bristol, East has the highest number of black and Asian residents of any city in the south-west.
I am pleased to say that the evidence is that the police force in Avon and Somerset, focused on the central police district and Trinity road police station, which is in my constituency, has learnt some very important lessons arising out of the Scarman report and the challenges of policing a multicultural area.
The establishment of the Lawrence inquiry does great credit to our Home Secretary. Many people like me were utterly appalled that many people in the police forces seemed to be in denial about what had happened. The hon. Member for Twickenham and my hon. Friend the Member for Eltham (Mr. Efford) referred to the fact that here was a young man who wanted to be an architect and, on the face of it, had every chance of doing so, who came from a stable, secure, middle-class home, and who was murdered on the street. Apparently, his family were initially treated by the police as "another black family". We have to acknowledge the roots of this terrible conflict and tragedy. That is what I hope and believe that the Lawrence inquiry will do.
Trinity road police station and the central policing district under Superintendent David Warren have produced guidance for the police about policing a multicultural community. They have recently published a booklet. That may sound a small thing, but it is invaluable in training people to deal with those who come from different family and cultural backgrounds. For example, it says that an officer wanting to arrest an Afro-Caribbean man should not lay a hand on his arm in order to do so because, culturally, that is one of the most threatening things that someone can do. It says that, if people do not look you in the eye when they are talking to you, it does not mean that they are shifty, but often means that they come from a cultural background in which to look someone in the eye is disrespectful and rude. If a woman has had an arranged marriage, that does not mean that she is stupid or backward, but that she comes from a different type of family structure. The booklet is full of useful and practical advice for policing in a multicultural area. I have conveyed that advice to my colleagues in the Home Office and I commend it to other police forces in similar areas.
Other hon. Members have referred this morning to institutional racism. It is difficult for any organisation or individual to acknowledge thoughts or actions that betray a feeling or belief that another person is in some way inferior. Institutional racism has a mirror image in institutional sexism, which is also difficult for any organisation to confront.
After 20 years or more of saying that we wanted more women Members of Parliament, the Labour party was brave enough during the previous Parliament to confront the fact that, while the party did not intend to be sexist, many of the things that we did at local and national level discriminated against women in the selection procedure. The evidence is here most days of the week in that we now have more than 100 women Members of Parliament. It is not an easy task to eradicate sexism. I notice that the hon. Member for Tunbridge Wells (Mr. Norman), the

deputy chairman of the Conservative party, is beginning to examine such matters in that party. Similarly, the police cannot escape that process.
Institutional racism does not mean that police officers are plodding the streets with racist thoughts or intentions, but it can mean that a culture has developed within which assumptions that lie behind the way in which an officer deals with people betray a racist attitude. Often, it is not intentional. One of the definitions of discrimination in the Race Relations Act 1976 and the Sex Discrimination Act 1975 is indirect discrimination—something that is not intended to discriminate, but in practice does.
There are lots of ways in which institutional racism can work. One of the most obvious is for people to see a 21 year-old black man driving around in a BMW and not to assume that he nicked it—an assumption that can be made. My hon. Friend the Member for Leicester, East (Mr. Vaz) recounted to an audience in the Grand Committee Room several years ago during a lobby on the Asylum Bill how during his first year as a Member of Parliament, he was stopped not far from here by a police officer and called "sonny".
We have to acknowledge that such things happen. It is pointless for people to say that institutional racism means that every single police officer is racist, or, if the chief constable of Greater Manchester police acknowledges that that is a fact, but the Commissioner of Police of the Metropolis says that it is not, for one to be set against the other. The best service that we can provide to society is to say that we have to examine the roots of the problem and try to deal with the consequences.
One thing that we have to do is accept the racial nature of certain crimes. That is obviously relevant to the Lawrence case, but all of us who represent multicultural areas can tell of crimes that appeared to be racist in nature, but were not accepted as such. Such cases can reinforce the sense of racism and make the policing of multicultural areas even more difficult. They can also deter recruitment to the police force among ethnic minorities, because people do not want to spend their working lives as "tokens"—there to be the exception to what appears to be a universally accepted rule.
In Bristol, there is an organisation called Support Against Racist Incidents—SARI—whose office is in my constituency and which has been praised by many individuals and organisations. It works closely with the police, as do all the community and voluntary groups in the central Bristol policing district. Through its work, SARI spreads public information about the nature and the effects of racism. In parts of my constituency, there have been the most appalling racist crimes and incidents. At every event or open day—for example, those run by the local housing services—SARI has a display highlighting the sorts of racist graffiti, violence and criminal damage that occur in Bristol.
SARI offers practical support to victims of racist crime and its role now extends beyond Bristol to Yeovil and Devon; however, its ability to provide such a service is at breaking point. I have told Ministers how important it is that SARI's work and that of similar bodies should be centrally funded, not only because local funding puts a great strain on local authority resources, but because such work is needed nationally. The hon. Member for Blaby (Mr. Robathan) referred to a similar organisation in Leicester. Such bodies not only command the enthusiasm,


support and confidence of the black and Asian communities, but do a great deal to support the work of the police.
We should look for ways in which to eradicate the barriers to the recruitment of black and Asian officers, who could do a great deal to strengthen our police forces and increase public confidence in them. It is in our long-term interests to confront racism and to point out to white people who are racist that they are claiming to be superior to people such as Nelson Mandela or Jessye Norman. I often recall the words of R. H. Tawney, that there will be equality only when high jinks in Mayfair are treated in the same way as drunk and disorderly in the east end of London. We have to take the same attitude toward racism. If a young black man is driving a BMW, perhaps we should assume that it belongs to him.

Mr. Peter Brooke: I am delighted to follow the hon. Member for Bristol, East (Ms Corston), as our debate has gained from having been extended beyond the Metropolitan police district. It was kind of the hon. Lady to refer to Mayfair, which is in my constituency, in the closing paragraph of her speech. I congratulate the hon. Member for Twickenham (Dr. Cable) on having given us the opportunity to debate this important subject. Finally, I welcome the Under-Secretary of State for the Home Department, the hon. Member for Vauxhall (Kate Hoey); it is happy for us that she is a fellow London Member of Parliament.
Like my hon. Friend the Member for Ryedale (Mr. Greenway), one of my cousins once served in the Met. I should briefly declare a few interests. When I served on Camden council, I was chairman of the Camden committee for community relations. In the aftermath of Lord Scarman's report, police-community consultative groups were set up in the City of Westminster, as elsewhere. There are three groups: one in south Westminster, one in the central and west end area and one in Paddington. In addition, there are two sub-committees: one on homelessness and one on licensing.
I gather that there is a widespread opinion in the Met that those groups work well. That was corroborated when I appeared before Chris Patten's commission on the future of policing in Northern Ireland, which considered the use of community committees there. I met the Patten commission because the Select Committee on Northern Ireland Affairs, of which I am Chairman, published a report earlier this year on the recruitment, composition and training of the Royal Ulster Constabulary. There are obvious parallels between the question of minority recruitment to the RUC and the issues that we are debating this morning.
When he was a silk, my brother, who is now a lord justice of appeal, was briefed to appear for the coroner on a rerun of the Deptford inquiry. There had been a motion that the first findings of the coroner's court be quashed and the case heard again. My brother says that it was one of the most difficult cases he ever had to take in court because, although he had to win the case for the coroner, who was his client, and ensure that there was no rerun of the case, he was conscious that the parents of those who

died in that infamous fire in Deptford were troubled that they might not have received justice at the earlier stage. He had to tread a very narrow line—to win the case, but to make sure that, by its end, the parents felt that it had been properly conducted and that the circumstances of their children's deaths had been properly explained.
My brother was well chosen for that role by central casting. In the 1960s, he had been unexpectedly recruited by a combination of Lord Denning and Lord Constantine—better known as the electrifying West Indian cricketer Learie Constantine—to improve opportunities for ethnic minorities at the Bar. He has latterly been involved in the arrangements for training judges to deal with ethnic matters.
I did not get hot and bothered when the Commissioner, in publishing the crime statistics not for this year but for a previous one, drew attention to the fact that there were a considerable number of convictions among members of ethnic minorities. The Commissioner's role was descriptive, not evaluative; he was simply indicating one of the issues with which the police have to deal.
Westminster's crime rate is much higher than that of the rest of the Metropolitan police district because of the enormous number of people who come into Westminster every day and who constitute a target for criminals. In my constituency, if I shake the hand of someone on the street during a general election campaign, I have a one in 12 chance of shaking the hand of someone who has the right to vote for me. However, anyone whose handbag or wallet is taken on Oxford street, in Soho, or anywhere in the west end, will be quite clear as to who committed the robbery, so I do not think that Sir Paul Condon erred in drawing attention to that.
I agree with those hon. Members who spoke about the sense of outrage that totally innocent people feel when they are stopped by the police while going about their lawful business. On one occasion when driving around Ashley gardens, where we used to live, looking for a residential parking space, my first wife was stopped by the police. They clearly believed that she was a prostitute cruising for business, and she was spreadeagled against a wall. It is ironic that all this happened in my own constituency. Neither she nor I made any public or private reference to that, but 15 years later, it is worth mentioning the event because such incidents do happen and those to whom they happen feel considerable outrage. I share the sympathy that has been expressed for ethnic minorities.
One of the experiences of the Select Committee on Northern Ireland Affairs, which in this Parliament has set its face to controversial issues, is that, as soon as we set up an inquiry, the body that we are investigating sets up a matching internal committee, often independently staffed, to consider the same issue. I welcome that, and I am delighted that the Metropolitan police are carrying out their own research, as the hon. Member for Twickenham said.
Other hon. Members have referred to the importance of recruitment. I shall not dwell on the parallels with the Territorial Army, which we have been discussing over the past fortnight, but, because this is a separate debate, I shall record again the statistics for the Royal Green Jackets volunteer arm in London. Twenty per cent. of its members are from ethnic minorities, against 1 per cent. in the Army as a whole. In Mayfair, which was mentioned by the hon. Member for Bristol, East, 43 per cent. of the cadets at the


Royal Green Jackets' depot and drill hall are from ethnic minorities, and 53 per cent. of the cadet contingent have single parents or are from broken homes. There is a moral there for the police and for the Regular Army, who should learn how it has been possible for the TA to effect that recruitment, which has not been occurring elsewhere.
I hope that an error will not be made about the TA, certainly in central London, but present Members are prone to blaming every ill that occurs in this country on the previous Government. The moment will come when that will no longer be intellectually possible. I am one of the two dozen or so—my hon. Friend the Member for Worthing, West (Mr. Bottomley), who is present, is another—who sat in the Chamber for the Conservatives between 1974 and 1979. In that period, in the run-up to the Edmund Davies report, there was a haemorrhage of sergeants from the Met aged 35 and above who got out because of the manner in which police pay was handled.
There was a crisis from the loss of police officers in the period after the Edmund Davies report; the new Government in 1979 were prepared to spend considerable money not only to meet the Davies recommendations on pay, but on further recruitment into the Met, yet there was not sufficient operational middle management of the quality required to train officers. That is a "What if?" question and we cannot tell how the course of history would have been changed if circumstances had been different. The report of the Northern Ireland Affairs Committee on the Royal Ulster Constabulary referred to a canteen culture, and there is no question that operational middle management plays a part in that.
I conclude as I began by thanking the hon. Member for Twickenham for initiating the debate. I am delighted to have been able to make a small contribution to it.

Mr. Peter Bottomley: I shall speak briefly, because I know that the national spokesman for the Liberal Democrats, the hon. Member for Sheffield, Hallam (Mr. Allan), wants to speak. I join in appreciation of all that has been said by other hon. Members in this debate, which has been well initiated and conducted.
I regret only that the hon. Member for Streatham (Mr. Hill), will not be able to take part, but the Under-Secretary of State for the Home Department, the hon. Member for Vauxhall (Kate Hoey), will be able to speak, at least as a Minister. I suspect that she will speak also as a Back Bencher because, in the past, going over Vauxhall bridge to her constituency at night, every person that the police asked to get out of their car was black. That is no longer the case, so some of the apparent wrongdoing, which reflects genuine wrongdoing, is being tackled with determination by the Commissioner of Police of the Metropolis. From the day that he took office, he has been determined to deal with all the problems that the police force faces. He has not been completely successful, as he has said.
There have been references to the Lawrence inquiry. Like the hon. Member for Eltham (Mr. Efford), I prefer to keep most of my remarks for when the second part of the inquiry has finished and the report has been published. It is worth noting that, within a day and a half of the tragic killing of Stephen Lawrence, newspapers had reported police sources as saying that they knew that he was a good young man from a good family. The detective work

went wrong, but it is worth noting also that Superintendent John Philpott responded to the request of the leader of Greenwich council to come to an immediate meeting at Greenwich town hall. That initiative and the exemplary behaviour of Doreen and Neville Lawrence meant that there was no follow-up action on the streets, which could have led to disaster.
I recommended to the Home Secretary in the previous Government that, instead of having an award to commemorate Philip Lawrence, the white headmaster who was tragically killed, it would be a fine tribute to have Lawrence awards to commemorate Stephen, a fine young black man, and Philip, a fine white headmaster. That would have been an inclusive way of marking their loss but also one that represented the decency in our community.
In such a debate, it would be easy to go back over the 23 or so years in which I have served in the House and pick out examples of bad behaviour by the police, and perhaps, on occasion, it would be right to do so. However, it is important to recognise the number of times when the police have behaved well or behaved better. Unless we recognise those changes, we shall not encourage those who are trying to effect change.
My right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke) rightly pointed out the importance of middle management. When I had the responsibility for measures to cut drink-driving, the canteen culture in various police services was different because not only chief constables but their sergeants imposed their example and standards.
When a relatively senior detective in the Metropolitan police got into difficulty with the force, it was possible, by agreement with his Member of Parliament, to meet a senior police officer and get the issue at least half resolved, rather than leaving it in the hands of lawyers. When my half-French research assistant was repeatedly stopped and mistreated by the police on his way home from dropping me—for example, at Broadcasting house at midnight—he and I were able to meet a senior police officer and that mistreatment stopped.
I recommend that, if members of the police are concerned about the possible responses of the Lawrence inquiry, they should ensure that, when a police officer has stopped someone to run a check on a vehicle or driver's licence, that incident is recorded. The worst condemnation that I make of the most recent case that I took up is that the police had no record of inquiries about a named person in a car whose registration number was known. That shows that something is going wrong. If, for audit purposes, the police cannot run a retrospective check on who made an inquiry, when they made it and what it concerned, they cannot be accountable because they cannot count, manage or measure. They should insist on such records. Organisations will change only if good middle managers are recruited and remain in the force.
I conclude with a point about the Metropolitan police. There has been a recommendation that the starting rates of pay for police in London should be increased. The people who ought to come into the police service are much in demand, whatever their ethnic background. Within the Government, people are asking whether that recommendation should be implemented. It should. Low or relatively low pay in central London is not an excuse for racial attitudes, but increasing pay may be part of the solution.
In that respect, as in others, the day that we can say that the colour of someone's skin is only as important as the colour of their eyes or of their hair, we shall know that the problem has been solved. We cannot say that yet.

Mr. Richard Allan: I am pleased that my hon. Friend the Member for Twickenham (Dr. Cable) managed to secure this debate, and I am grateful to the hon. Member for Worthing, West (Mr. Bottomley) for his brevity. I shall try to be equally brief.
I want to highlight the problems faced by ethnic minorities in being the victims of crime. That aspect is often overlooked because there is a focus on the experience of ethnic minorities as the alleged perpetrators of crime and their subsequent treatment by the police and the criminal justice agencies.
Statistics unequivocally show that ethnic minorities are more likely to be the victims of all forms of crime. The British crime surveys of 1988 and 1992 and Home Office research study 154 showed that, statistically speaking, ethnic minorities are significantly more likely than whites to be the victims of both household and personal offences. The findings of the latest crime survey, published in Home Office statistical bulletin 6/98, showed that
During 1995, ethnic minorities had a statistically higher risk of victimisation than white people.
Of course, there are sub-categories within that grouping. The bulletin continued:
In particular, risks of almost all crimes were higher for Pakistanis and Bangladeshis.
There is variety within the different groupings and there is a risk of treating all people as the same, but every group of people with colour have a statistically higher risk of being victims of all forms of crime.
In addition to that experience of general crime, two important aspects must be considered: racially motivated crime and fear of crime. Racially motivated crime has an especially harmful effect on community relations. The crime surveys showed a high under-reporting of such crime. The 1996 survey recorded that
Less than half of all racially motivated crime recorded
in the survey was
reported to the police",
and that
Reporting to the police was less common among ethnic minorities than white people. Only 29 per cent. of racist crimes where the victim was an ethnic minority were reported to the police, compared with 55 per cent. where the victim was white.
Under-reporting and the feeling that racially motivated crime is not taken seriously may contribute to a lack of confidence in the police in general. We are pleased that improvements are being made in that regard, such as the introduction of legislation on racially aggravated offences, for which we have high hopes, but we believe that there is far more work to be done.
When I was a member of Avon county council, some time ago, I came into contact with Support Against Racist Incidents; like the hon. Member for Bristol, East (Ms Corston), I can testify to its good work. As a part of the community, it talks to people—sometimes literally in

their language—and encourages them to report the racially motivated offences that are certainly occurring. I hope that the Government will provide support to enable more similar work to be done.
Fear of crime is markedly higher among ethnic minorities, and can dramatically affect people's quality of life, regardless of their background. The 1996 survey showed that
Ethnic minorities scored higher than white people on all
the crime survey
measures of fear of crime. They perceive themselves to be at greater risk of crime than whites … To a large extent this is a reflection of their
actual
higher risks of victimisation and harassment.
A figure that stuck out for me from the survey's findings was that 10 per cent. of black people fear going to football matches, as against 3 per cent. of white people. I know that the Commission for Racial Equality is doing much work with its "Let's kick racism out of football" campaign, but plenty remains to be done when significant numbers of citizens fear going to a certain type of event purely because they feel that they may be harassed, or worse.
Under-reporting in general does not appear to be a major problem, in that the figures for reporting of crime are broadly similar for all groups, but there is a high expectation among ethnic minorities that nothing will happen after the crime has been reported. That low expectation of police action is a major problem.
Some major socio-economic factors are outside the scope of the debate. The fact that people who belong to an ethnic minority often live in poverty and deprivation is linked with their experience of crime, quite apart from the additional factor of their ethnicity.
One of the cornerstones of any improvement in police action is the ethnic monitoring of all police activity. My hon. Friend the Member for Twickenham referred to the other main issue—recruitment. I say to the hon. Member for Blaby (Mr. Robathan) that we believe that targets— not quotas—are important, and that firm action is needed to ensure that officers justify their failure to meet targets. There may be a good reason—recruits may not be presenting themselves—but we believe that someone based centrally must ask chief constables what is happening and demand an explanation.

Mr. Robathan: I am very happy with that suggestion. Targets have an important role and of course recruitment should be targeted; I was expressing a fear that heads would roll if the targets are not met.

Mr. Allan: I am grateful for that clarification.
For ethnic monitoring to be undertaken seriously, and subsequent action to be taken, there must be leadership from the top. The Home Office research study into ethnic monitoring, No. 173, picked up some widely differing attitudes to monitoring. Some police officers were using it defensively; they were saying, "We know that the blacks carry out all the crime and we believe that monitoring will help us prove it". Others responded genuinely and appropriately, saying that monitoring was


an important tool whose use was in the interests of the police, enabling individual police officers to show that they were not acting in a racially motivated or racist way.
Monitoring, in and of itself, is not the answer. The attitude to monitoring must be right, and senior management must take note of, and act on, the results. If figures for stop and search reveal a problem, senior management must ask throughout the ranks why that is happening and seek solutions.
We believe that the challenge is to bring about the right attitude to monitoring and to take action to combat racism throughout police forces in Britain. I have every confidence in chief constables to show the necessary leadership, but we must make it clear that that is a public priority—a political priority.
I believe that, if we are looking for some good to flow from tragic events such as those that triggered the Stephen Lawrence inquiry, it would be a fitting result for all police forces to place combating racism—in their ranks and in society—high on their agenda. As a Liberal Democrat, working for a tolerant and free society, I believe that there is a moral case for that. I also hope that we shall take seriously the experiences of people from ethnic minorities, in relation to the higher levels of actual crime and fear of crime that they suffer, and their appalling experience of the horrendous effects of racially motivated crime. If that consciousness guides our police priorities, it will single out that aspect as a key area for police action.
We hope that the new community safety strategies will provide a focus, as they highlight the experience of people from ethnic minorities and allow the police to target resources. I look forward to the development of those community safety strategies, and hope that they will have serious input from all sections of the community. I hope that they result, not in a top-down approach, but in a genuine bottom-up approach, which will allow everyone to talk about their experiences. I look forward to the Minister's response on this important issue.

Mr. John Greenway: I take the opportunity—the first that I have had—to welcome the Under-Secretary of State for the Home Department, the hon. Member for Vauxhall (Kate Hoey), to the Treasury Bench. We are great friends in this place. I suspect that, later today, our minds will turn to a town in Ukraine, because of our support for a certain football club. In the meantime, I am glad to speak with her across the Dispatch Boxes on this important issue.
I congratulate the hon. Member for Twickenham (Dr. Cable) on securing the debate. Debate on police issues is always welcome, especially to me. Although the House will, in due course, reflect on the report of the Macpherson inquiry into the Stephen Lawrence tragedy, there are—as the debate has shown—many matters on which we may usefully express a view while we keenly await its publication. I am sure that the House would wish to thank Sir William Macpherson and his team for their work. I am sure that the House will also wish to share in expressing the admiration of the hon. Member for Eltham (Mr. Efford) for the courageous and temperate way in which Mr. and Mrs. Lawrence have conducted themselves in recent months over that tragic affair.
Central to the deliberations of the Lawrence inquiry has been the question whether there is institutionalised racism in the police service. The debate has shown that the phrase

means different things to different people. We need to clarify what we mean—what people are trying to allege— by the phrase "institutionalised racism". If it means that the police service as a whole sets out to target and persecute people from black communities solely on the ground of their ethnic background, I do not believe such an allegation to be remotely true. On the other hand, if the intention is to suggest that there is in the police service a tendency among some officers, as a result of their personal racial prejudice or—as the hon. Member for Bristol, East (Ms Corston) correctly pointed out—all the assumptions that they make, to fail on occasions to treat every incident that might involve people from ethnic backgrounds with equal fairness or single-mindedness, that allegation may well be true. Nevertheless, such tendencies and behaviour cannot be tolerated. As the hon. Member for Sheffield, Hallam (Mr. Allan) has just reminded the House, in community and police relations, the problem is more often one of people from ethnic backgrounds being victims of, rather than their indulging in, criminal activity.
A central issue in the Stephen Lawrence incident has been police response to racially motivated violence. Not that many years ago, when I was a member of the Home Affairs Select Committee, we inquired in depth into the issue of racially motivated attacks. Committee members were struck by the variation in standards of community relations among police forces, even within the Metropolitan police in different parts of London. There is no substitute for strong and good relations between police and communities, and achieving such relations must be an important objective for all police services.
In recent months, with the passage of the Crime and Disorder Act 1998, we have debated how racially motivated violence should be prosecuted. However, as my hon. Friend the Member for Worthing, West (Mr. Bottomley) said, it is difficult not to conclude that such argument is essentially irrelevant when dealing with the primary fact that a very fine young man has been murdered.
I have often stated in the House my belief in the need for a multiracial police force. Although only a fool or a racist bigot would argue with the proposition that the United Kingdom's multiracial society needs a multiracial police force, there is still much to do done to build such a force. Only last week, Mr. Fred Broughton of the Police Federation told the Home Affairs Select Committee that, in the fight against crime, "it is essential" to have a far more balanced police force.
I have been able on several occasions to observe the effectiveness of multiracial policing in major cities in the United States, and argue that such policing is a prize that is well worth striving for. The Home Secretary was right to suggest in his recent speech to the Black Police Association that more needs to be done to foster good relations with all sections of our diverse community, and that the police service should reflect the diversity of the community that it serves.
The Government must, nevertheless, do more than merely set targets for recruitment, retention and promotion of black and Asian officers, because targets alone will solve nothing. My hon. Friend the Member for Blaby (Mr. Robathan) has dealt with the matter of what happens if targets are not met.
The House must ask how chief constables are to increase the number of officers from ethnic communities when, as the Home Secretary knows full well, other demands on police budgets—some of which have been imposed by the Home Office—are forcing many chief constables to freeze recruitment.
The greater flexibility given by the previous Government to chief constables to decide their spending priorities was, and remains, a welcome development. However, it remains Ministers' responsibility to ensure that the demands that they place on the police service are achievable within the resource base that they provide.
The plain fact is that many police forces will find it extremely difficult to recruit additional officers in the next few years, and that some forces are already making reductions. Progress in reaching the important targets for recruitment of more black and Asian police officers can be met only through the natural process of younger officers replacing retiring officers.
It is crucial that more is done by senior officers to improve police culture in dealing with ethnic communities. People from ethnic communities need encouragement to believe that they will be made to feel welcome if they join the police service.
As several hon. Members have said today, people from ethnic communities neither need nor expect positive discrimination in achieving promotion. Many young people from an ethnic background who have been born and brought up in the United Kingdom are highly capable of achieving, entirely on merit, the most senior ranks in our police service.
The task for chief constables and senior officers is to eradicate any racist elements in their forces. To do so, they will require the full support of both the Government and Parliament. The Stephen Lawrence tragedy, and the case of Michael Menson, demonstrate all too clearly the price of failing to achieve that objective.
Some have questioned whether some senior police officers, even the Commissioner of Police of the Metropolis himself, should resign. I agree with those who say that such tokenism will not address the culture issue, and that a more significant factor may be whether senior officers have the confidence of their own serving officers. Above all, training and internal personnel initiatives are most likely to be effective in addressing the issue. The hon. Member for Bristol, East made telling points on the need for the police service to have a far greater understanding of different cultures, and on the fact that behaviour regarded as unusual by some may be thought of as perfectly normal by others.
There must be change not only in police culture. As Mr. Broughton told the Select Committee last week, police morale has taken an absolute battering over recent allegations of racism in the service. Although I do not have time to quote at length Mr. Broughton's evidence to the Committee, that evidence will be available to hon. Members. I should say that he mentioned the tremendous anger of police officers. As he said—it is confirmed by my own experience—the fact is that the vast majority of police officers are not racist, corrupt or dishonest. They are doing a difficult job. The House has always taken every opportunity to praise the excellent job done by the vast majority of serving policemen and policewomen in the United Kingdom, and we do so again today.
I have no doubt that the most pressing need is to address the loss of faith in our police service, which has been generated by recent events, among residents in many communities, particularly in London. However, the situation is not entirely gloomy. Later today, we should be able to see in the Evening Standard a new ICM poll showing that, according to members of ethnic communities, race relations have improved significantly in the past 10 years. We therefore have to view the issue in perspective.
Suspicion of, and lack of confidence in, the police service is the primary barrier to achieving the Government's objective of increasing the number of officers from West Indian, African, Asian and other ethnic backgrounds. Young people from those communities are being actively discouraged from joining the police service. It will take a monumental effort to repair the damage of recent months. A great many people in the police service relish that challenge, but will need to have confidence that corrupt officers and those guilty of blatant racial discrimination will be disciplined.
The police service will also need reassurance that Parliament stands ready to provide the support, both moral and material, that it needs. It is my profound wish that the cross-party consensus on the issue that has been so obvious in the debate will encourage the important process of rebuilding and strengthening police and community relations in Britain.

The Parliamentary Under-Secretary of State for the Home Department (Kate Hoey): I thank the hon. Member for Ryedale (Mr. Greenway) for his kind words. It is a privilege to respond to my first Adjournment debate on this topic. My hon. Friend the Member for Streatham (Mr. Hill), who is sitting on the Front Bench but cannot speak, and I, as the Member of Parliament for Vauxhall, have a great interest in this subject as we both represent the borough of Lambeth.
I congratulate the hon. Member for Twickenham (Dr. Cable) on his good fortune in securing the debate and on his choice of subject. The issues of racism and community relations in the context of the police are both highly topical and extremely important subjects for the House to consider. His thoughtful and forward-looking remarks set the tone for the whole debate. It is good to see that hon. Members on both sides of the House have wanted to contribute to the debate. As the hon. Member for Ryedale said, that shows the all-party nature of the subject. If we are to tackle racism, we must all work together.
There has been a tendency to regard such debates as primarily about the Metropolitan police, but the speeches by the hon. Member for Blaby (Mr. Robathan), my hon. Friend the Member for Bristol, East (Ms Corston) and the hon. Member for Worthing, West (Mr. Bottomley), who may think that he is still a London Member—he is not, because my hon. Friend the Member for Eltham (Mr. Efford) is sitting behind me—have shown that the debate has been more wide ranging. Although the Met gets huge publicity because it is such a large force, its problems are replicated in police forces throughout the country.
The Government have made tackling racism a top priority. In the United Kingdom's increasingly diverse society, the police service needs to reflect that priority if it is to continue its tradition of policing by consent. The service relies on the support and active participation of all sections of the community. It must also be seen to be tackling racial and other discrimination so that it can provide a better service to all sections of the community.
We all want a police service that treats all people fairly, regardless of their race or religion. The experience of ethnic minority communities does not meet that aspiration. We must take that on board. To do its job properly, the police service needs the trust and confidence of every citizen. Police and community relations must be brought into the heart of police policy and practice.
Our goal is to create a police service that treats people fairly and equally. Central to that is the need to ensure that racially motivated crime is tackled effectively. Part of the answer is to provide the right legislative tools to tackle racial crime. We have made good progress on that in the Crime and Disorder Act 1998, with the introduction of new racially aggravated offences. However, legislation is not enough. The way in which the police respond to racial crime is crucial. It is a key test of whether the police are delivering their services fairly to all sections of the community.
My hon. Friend the Member for Bristol, East mentioned a booklet about the work done under Commander Dave Warren in Bristol. That approach has helped to turn round police-community relations in that area and is to be commended. As the hon. Member for Worthing, West said, much work is being done to improve police performance in that central area. In my time as a Member of Parliament, I have seen changes in my constituency, where some people would hardly talk to the police. That has changed and genuine partnerships now exist.
The Association of Chief Police Officers has produced a good practice guide for police response to racial incidents. A protocol has also been agreed with the Crime Prosecution Service to ensure consistency in identifying cases with a racial motivation. Those are all steps in the right direction, which we intend to build on to ensure that the mistakes of the past are avoided. The Government welcome the racial and violent crime task force, headed by DAC John Grieve, which the Metropolitan police has set up. It has the challenging task of creating a strategy for tackling that key area in the Met.
Reference has been made to the Lawrence inquiry. I wish to add my comments on how the Lawrence family has handled the whole terrible tragedy. Part 2 of the inquiry that my right hon. Friend the Home Secretary set up last year into the death of Stephen Lawrence is now well under way and is looking into the lessons to be learnt for the investigation and prosecution of racially motivated crime. The death of that young man was a tragedy. The challenge will be for the police service to ensure that the results of the inquiry are grasped as an opportunity to make real and lasting changes so that it can gain the confidence of all sections of the community.
How the police use their powers is another key test of how fairly they serve the community. It can have a significant effect on the lives of members of minority ethnic communities: on their perceptions of the police and their willingness to co-operate with the police in tackling crime and disorder. The results of the first full year of

ethnic monitoring of police activity, published last December, showed substantial differences in the use the police make of their powers when dealing with different ethnic groups. The statistics showed that police forces consistently stopped, searched and arrested more black people than white or Asian, but were less likely to caution black people. That has been referred to over and again by hon. Members today.
Although many variables make it difficult to interpret the data perfectly, there can be no escaping the message that black people in particular seem to get disproportionate attention from the police. It is vital that the police service takes account of that, and takes effective action to ensure that the substantial powers that police officers hold are used fairly and effectively. Progress is being made. For example, the Metropolitan police service has reviewed its use of stop and search, and developed a plan to manage that tactic fairly and effectively. The Association of Chief Police Officers has set up a project to develop effective use of ethnic monitoring data, which will inform the development of a good practice guide. We all await the results with interest.
Appropriate training for the police in community and race relations is essential to enable them to operate effectively and fairly. The Home Office has, for many years, funded a specialist unit to give expert support to the service in race and community relations training. A new strategy to be implemented from next year will see a shift in how that support is provided: support will be provided directly to individual forces to place community and race relations firmly within operational policing activities.
I tell my hon. Friend the Member for Eltham that the review of national police training is on ice while the Select Committee on Home Affairs conducts an inquiry into police training. However, we intend the results of the Stephen Lawrence inquiry to feed into the review.
We hope that the new force-based approach, which will include extensive consultation with local communities, will provide the right operational and cultural context in which training can take place. As the hon. Member for Twickenham said, corners must not be cut on training.
Membership of the service must now, more than ever, reflect the diversity of society. The Home Secretary has expressed his personal commitment to that, and to the setting of targets for minority ethnic recruitment, retention and promotion in all services for which the Home Office is responsible. I gently advise the hon. Member for Ryedale that we cannot allow resources to be used as an excuse for not recruiting more ethnic minorities in the police service. I welcome the hon. Gentleman's support for targets, but make it absolutely clear that targets are not the same as quotas. There is a big difference.
The Home Office and the Black Police Association have a close working relationship, to which black police officers are well placed to make an important contribution not only operationally but in terms of understanding what goes on in their own community.
It is the Government's goal to create a society that treats everyone with decency and respect, regardless of their colour. The police service must take a lead in making that vision a reality. The report of the inquiry into Stephen Lawrence's death will have a significant impact on the future of race and community relations within the police


service, and the service must rise to that challenge. I remind the House of what Lord Scarman said in his 1981 report:
A police force which fails to reflect the ethnic diversity of our society will never succeed in securing the full support of all its sections.
I am confident that there is a strong commitment at all levels of the service to making the necessary changes and that we can move forward and learn from the lessons of the past. I am confident that we shall learn from the Lawrence inquiry and I very much welcome the opportunity to debate the matter this morning, and the interest shown by all hon. Members.

School Students

Ms Gisela Stuart: In Birmingham, on average, one in five children will change school each year other than at normal transfer times, but averages hide some salient statistics. In my constituency, the turnover rate is 29.6 per cent. in the Bartley Green ward, 22 per cent. in Edgbaston, 18 per cent. in Harborne and 19 per cent. in Quinton; in other words, the rates in all my wards are above or well above the average for the city.
Some of the schools in my constituency have significant problems. I shall use four schools in the Bartley Green ward to illustrate the tremendous range. At Ley Hill school, the turnover is 50 per cent.; at Nonsuch school, 45 per cent.; and at Kitwell school, 42 per cent. However, St. Peter's Roman Catholic school, which is 500 yd down the road from Nonsuch school, has a turnover of just 9 per cent. Averages can be deceptive and we must look at the problems faced by individual schools.
Why is mobility a problem? Children who change school frequently are at greater risk of under-achieving academically. They tend to have a poorer attendance record, poorer concentration and poorer motivation. They are also more likely to have special educational needs. High mobility in any school affects continuity and progression, and children find it difficult to catch up when they change school. That, in turn, tends to lead to low self-esteem, behavioural problems and exclusion. The children who change schools are not the only ones affected; the children who attend a school at a time of high mobility suffer knock-on effects. Those children who are not absent are still affected when new children have to catch up, and that damages their educational experience.
Some research has been carried out in Birmingham. In March 1997, the Ladywood consortium of schools carried out a survey on pupil mobility. The results were most enlightening. Moving house accounted for some 72 per cent. of children changing schools. However, some 18 per cent. of those in Ladywood remained in the area but still changed schools. In certain parts of Birmingham, there has been a fall in the birth rate, so schools have vacant places. It has become almost a habit that, when children encounter difficulties in one school, they are simply moved to another. Rather than facing up to problems and trying to solve them, moving is seen as a solution, but it tends to aggravate the problems.
How can we reduce and manage mobility? It is accepted that it is a cross-agency problem and that no one agency can address it. In Birmingham, additional resources have been provided through the local management of schools formula. There are also pilot projects on unique pupil identifiers to ensure that pupils are not lost in the system. There is an increased focus on inclusion, which involves giving schools additional support when children move to ensure that their records and work are passed on.
Extra funding is not sufficient, however. The extra resources given as a result of mobility tend to have a negative knock-on effect on the funding for free school meals. Therefore, rather than gaining twice as they really should, some schools tend to lose out by the trading off under the formula. It generates some extra funds, but they are not sufficient.
My hon. Friend the Under-Secretary will be aware that, although the English average for claiming free school meals is 22 per cent., the average for Birmingham is 37 per cent. In some schools in my constituency, entitlement on the basis of drawing income support would suggest figures of 60 to 70 per cent., but the benefit is not claimed. There is still a perceived stigma to claiming free school meals, so official figures underestimate the true problem.
I should like to draw on the experience of two head teachers in my constituency who described the problem more accurately than I can. Mrs. Pat Cook from Kitwell primary school wrote to me about resources, saying:
The trend over the last three years shows a pupil turnover rate of 42.5 per cent. The present system of funding does not fully take into account extra consumable materials the school has to purchase … additional teacher time, secretarial time, Special Needs Co-ordinator time in general administration of records"—
which change continually—
discussions with previous and receiving schools, telephone and postal charges"—
to communicate with new parents and the
additional workload when statemented pupils transfer.
There is a tendency for pupils who move very frequently to have special educational needs. She also makes this important point:
Pupils who join us after form 7 (January) but leave before September bring no funding at all".
The funding formula is not sufficiently sensitive.
Other than resources—it could be argued that it is for individual local education authorities to come up with formulae that address their needs—there is also the problem of setting targets. The Government have asked schools to set targets for 2000 in respect of key stage 2 and GCSEs.
Let me make it clear that none of the head teachers with whom I have spoken is against setting targets or in any way lacks commitment to raising standards. Pat Cook wrote:
We are committed to raising standards—we are happy to set targets—but please take into account pupil mobility.
She said that 30 of her current year 6 will sit an exam by the end of the year, but 10 of them have only just joined the school.
The second school in my constituency to which I make direct reference is Ley Hill primary school. The head teacher, Roger Cunningham, told me last week that he had 380 pupils on the roll and that, last year, he admitted 174 and lost 154. Although he accepts that the figures include some year 6 students and some reception students, pupil turnover averages 50 per cent. His particular concern is that the Government's system of target setting is, in his words,
at best gazing into the crystal ball in a school with a mobility of some 50 per cent.
He writes:
The circular 11/98 'Target Setting in Schools' does not allow for targets to be adjusted for mobility once they have been set. It argues that mobility can be positive as well as negative. While that is true it does seem that Ley Hill is subject to Social Mobility with our better families being rehoused. Since carrying out our annual tests in May, we have lost five children from the 2000 target group. Three of them would have been certain Level 4 children. We have admitted into the year group a child with learning difficulties who has arrived complete with Integration Support.
Roger Cunningham and other head teachers face the difficulty that committed teachers and head teachers do their level best to deal with a rapidly moving population, but there is a danger that some of the target setting assumes a linear progression in improving standards that schools such as Kitwell will never be able to achieve by the very nature of the communities that they serve. They have a very real fear that the current targeting system is not sufficiently sensitive to their schools, which should be allowed to renew and review their annual targets much more frequently. I urge my hon. Friend the Under-Secretary to reconsider the current system of target setting to take account of mobility.

The Parliamentary Under-Secretary of State for Education and Employment (Mr. Charles Clarke): The Government welcome the debate. I congratulate my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on the strong and clear way in which she has put her case. I should like to mention the similar work of my hon. Friend the Member for Waveney (Mr. Blizzard).
For a long time, central Government have given insufficient priority to high pupil mobility. Unfortunately, the statistics that my hon. Friend has given are not atypical. She mentioned schools with mobility rates of 42, 45 and 50 per cent. and wards in her constituency with a 29 per cent. mobility rate. My hon. Friend the Member for Waveney made an analysis of four schools in his constituency—a very different part of the country—where turnover was 31 per cent. Data obtained from six London local education authorities have verified that this is a major issue in many parts of Greater London. Statistics for one inner-London authority show that more than one third of children taking key stage 2 tests last year had not been in the same school at key stage 1. Manchester local education authority also cited high mobility as a key issue in its evidence to the 1994–95 Education Select Committee inquiry on performance in inner-city schools.
The whole House owes a debt to my hon. Friend the Member for Edgbaston for raising the issue, because the problem is not just local to her constituency; it has profound implications across the education system, and insufficient attention has been paid to it.
I agreed with my hon. Friend's points about the implications of high mobility for education and the educational problems that arise when it is difficult to manage and address issues of mobility properly. High pupil mobility is one of the many factors that can affect pupil performance and school management. Much more attention needs to be paid to it. However, there is little hard information on the causes and effects. The issues are complex. I shall mention four factors that affect pupil mobility.
The first factor is internal migration. People may move locally because of a change in their job, career cycle, life cycle or housing—in that respect, I was interested in the Ladywood survey to which my hon. Friend referred. There are also particular communities such as travellers who move around and for whom specific provision is made in the standards fund. The second important factor is institutional movement—exclusions, voluntary transfers, people moving between special schools and others and people moving between the private


independent system and the state system. Thirdly, there is individual movement—children in care, families breaking up and circumstances changing that result in children moving around. Fourthly—this is not a trivial issue at all, particularly in our great cities—there is international migration, as people move to and from this country; that can happen as a result of making job changes, seeking refugee status or moving around as a student.
A complex series of factors play their part in determining what happens, but our information is very patchy. My hon. Friend mentioned the contrast between two neighbouring schools, one with a 9 per cent. level of mobility and the other with 42 per cent. My Department is co-operating with a new research project to be conducted at the migration research unit at University college, London by Dr. Janet Dobson, who wrote an interesting piece on the subject in The Times Educational Supplement two or three weeks ago. With funding from the Nuffield Foundation, the study will look at the nature and causes of pupil mobility and the implications of high mobility for current national strategies to raise educational standards and achievement.
In particular, the project will review the current state of knowledge on child migration, which is patchy. It will establish what is currently known about the implications of high pupil mobility, developing a better understanding of the incidence of high mobility and the policy issues deriving from it and painting a detailed picture of the scale and nature of pupil mobility in some high mobility schools and the implications for strategies to raise achievement. We are considering additional funding support to accelerate the project, which will begin next year, so that it can be more comprehensive and achieve more accurate results more quickly. We look forward to the results with great interest.
We would welcome more concrete evidence on mobility, such as that produced by my hon. Friend, to clarify how issues arise between different schools in an area and the implications for educational performance. The subject has not been sufficiently discussed. I hope that the research project with which we are co-operating will provide a focus for proper debate and discussion of the issues.
The research project will also provide the basis of any policy changes that may be needed to take account of the problems caused by mobility. Many issues are involved, of which my hon. Friend raised several. Record keeping is important. Records are not passed on in a way that assists education as people move from school to school. There is a lot of evidence that the performance advance of children at the beginning of secondary school in particular is not as fast as at other times. One reason is that school records are not passed on as efficiently and rapidly as they should be. As a result, secondary school teachers do not understand their pupils' educational history as well as would be beneficial to them as teachers and to the pupils. That is highlighted by what my hon. Friend has said about mobility between schools, not just at the primary-secondary transfer. My Department will produce new guidance later this year to tighten up on the approach so that our system of records will ensure that past educational achievement is properly understood.
My hon. Friend also mentioned exclusion and truancy and the general framework of social exclusion that affects some schools more than others. She will know that, at the start of October, my right hon. Friend the Secretary of State announced a major new programme of £493 million of expenditure over three years.

Ms Stuart: Some schools in my constituency have pupils with dual registration. A pupil may have been excluded from one school and be then registered in a special school, and a mainstream school is prepared to take that pupil on dual registration. If that student has to be expelled again, the forecast GCSE results will count towards the targets. That provides a disincentive for schools to take the risk of bringing students back into the mainstream.

Mr. Clarke: That is an excellent and valid point, which I entirely take. I shall comment later on certain reviews; perhaps I may address my hon. Friend's accurate and correct point in that context. As with her other points, it has general applicability across the system.
Our social exclusion policies seek to achieve a multi-agency approach, in which schools work with the police, the probation service and particularly social services to try to ensure a much more supportive, less professionally segmented, more positive and constructive atmosphere in which to try to address the problems. We are specifically putting resources into the education of children in care, which has been very much neglected over a long period. Although those measures do not directly address the issue of mobility, I hope and believe that the coherent Government programme will reduce the incidence of some of the factors that lead to mobility and problems in schools in my hon. Friend's constituency.
My hon. Friend referred to target setting, which is an exceptionally important aspect of the subject. As she knows, the Government believe that setting specific, measurable targets for pupil performance is a very powerful lever for raising educational standards. I was very glad that she mentioned the commitment to that approach of head teachers of the schools that she described. Their commitment is shared throughout the teaching profession. People acknowledge the benefit of setting targets to focus attention on how we solve problems.
Setting pupil performance targets is also an essential tool in school management, as it adds clarity and focus to the school planning process, allowing a school to address issues and problems internally. Higher standards will be achieved only if schools take responsibility for their improvement and feel that they have ownership of the target-setting process. My hon. Friend the Member for Edgbaston rightly pointed out that some head teachers feel that they do not own sufficiently the target-setting process in their school when external factors are hitting them over the head. Just as they need to feel ownership of the process, we need to be able to respond constructively.
There is no doubt from research and inspection evidence that target setting raises pupil performance. There is no doubt either that our new statutory targets are in line with other targets that the Government are setting, to achieve coherence between schools and LEAs' educational development plans, and nationally, as we seek to move the process of achievement forward.
It is important that schools set targets based on past trends, benchmark data, national targets, LEA targets and teacher forecasts, which aggregate pupil results. It is therefore entirely reasonable that, in schools where there is high mobility of the kind to which my hon. Friend referred, that factor is taken into account when setting targets and deciding how to move forward.
High pupil mobility makes it difficult to aggregate school targets on individual pupils. As the schools that are affected are so wide ranging—I have been surprised by it—it is important that we consider detailed research in deciding what guidance to offer on how mobility can be taken into account. I regret that, in past years, there has not been detailed research into the matter. That is why I am glad to be able to announce today our co-operation with the research projects at University college, London.
Schools with high pupil mobility should certainly seek to make similar progress toward national and LEA targets to other schools, as the head teachers of the schools in Birmingham, Edgbaston have acknowledged. It is obviously highly desirable in so doing to take account of a school's circumstances, including high mobility. We are reviewing the target-setting process for 1999. It would not be appropriate to revisit the arrangements for this year so late in the process, although we shall draw on this year's experience in reviewing the working of regulations governing target setting. We shall obviously take into account a wide variety of issues as well as, to the extent that that is possible, pupil mobility issues.
I should make one important qualification. We shall not, even this year, properly understand what causes mobility and why its incidence is so selective and partial in schools in the same LEA, constituency or ward. Before we come to firm, long-term views on how we should properly take pupil mobility into account, I am keen to see evidence generated by the research projects to which I referred.

Ms Stuart: It is interesting that, because of the different reasons behind mobility, the social problems associated with it do not arise in the nearby constituency of Birmingham, Selly Oak, where the university population causes a high turnover. I therefore welcome the detailed research.

Mr. Clarke: I appreciate that remark. Indeed, my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) tabled a written question on the matter earlier in the year, in which she focused on similar points. The difficulty is that the issue is so complex; there is such an interplay of factors. Before giving clear guidance, we need to establish how such factors relate to each other. One very important thing that we need to do nationally, in schools and through LEA educational development

plans is to identify the causes of high mobility properly and develop strategies to reduce its adverse effect on pupil performance.

Mr. Don Foster: I thank the Minister for his positive response to the hon. Member for Birmingham, Edgbaston (Ms Stuart), who has raised a very important subject. She raised one issue on which he has not touched—the tracking of pupils. Will he comment on the Government's thoughts on the matter? I am sure that he is aware of concern about the fact that we have no idea where some pupils who leave a school go. Such tracking data would have been very helpful, for example, in the appalling and tragic Fred West case. Have the Government any plans to implement a tracking mechanism?

Mr. Clarke: I entirely accept the hon. Gentleman's remarks. I mentioned the transfer of records. The awful West case was one of the aspects that informed our approach. We must consider not only educational issues, which I have sought to address, but those concerning lost children, which can be, and have been, deeply tragic. We are taking on board the hon. Gentleman's comments. We are looking at ways in which to introduce unique pupil identifiers—UPIs—to which my hon. Friend the Member for Edgbaston referred. There are significant information technology issues, too, as schools begin to move forward in that respect. We are conscious of the fact that, as we try to work out the best way to adopt a much more effective system of tracking pupils, which is needed, we must not place additional burdens on teachers. My Department is looking closely at the matter and will provide detailed guidance later this year on record keeping and the transfer of records. More substantially, we shall be making proposals on this very important issue. I am grateful to the hon. Gentleman for raising it.
My hon. Friend the Member for Edgbaston asked how head teachers and schools should explain to local communities the implications of mobility figures for their performance results. I should emphasise that it is entirely appropriate and right for performance tables and results to be published in the proper context in annual reports, so that parents and the local community may understand the circumstances in which the achievements were made, and, should head teachers or governors deem it appropriate, the specific impact of high pupil mobility on examination results is explained.
I hope that, on the evidence of the research project that I have mentioned, and the steps that we are already taking to review target setting, my hon. Friend will accept that we take the issue seriously. We would also encourage governors and head teachers to explain to parents and the rest of the community the precise impact that high mobility has on exam results. I thank my hon. Friend for introducing the debate, which gives the first real airing to an important subject that is not well understood.

Newhaven Port

Mr. Norman Baker: I am grateful for the opportunity to hold the debate, although I wish that it were not necessary. As the Minister will know, I last initiated an Adjournment debate on Government support for Newhaven in June, when I drew attention to the importance of the port not only for Newhaven itself but for a much wider region. I am sure that she accepts that a wider region is affected by the fortunes of Newhaven port.
Introducing my debate on 3 June, I said:
This is a critical time for Newhaven. The port is at a crossroads … It has the potential a major success story of the next century, but it might also slip away, leaving a shell of derelict buildings, rusting metal and high unemployment …The Government, local councils and, crucially, the private sector must all deliver if we are to succeed".—[Official Report, 3 June 1998; Vol. 313, c. 324.]
I am sorry to tell the House that the five months since then have not been kind to Newhaven. The crossroads sign has begun to swing round, away from prosperity and towards the rusting metal and empty shell. In response to my previous debate, the Minister gave me genuinely sympathetic words, and set out the help that has been provided by both the present and the previous Government.
I acknowledge the help that has been given, and place on record again my thanks for the positive approach and flexibility of the Government office for the south-east. However, let there be no misunderstanding. Today I have to say clearly that that level of help is no longer enough. The situation has deteriorated, and I ask the Government to move up a gear, as the French Government did yesterday.
The seriousness of the position is reflected by the fact that in the Strangers Gallery today we have a large contingent from Dieppe, including the Deputy and mayor, Christian Cuvilliez, with representatives from the unions and from the Dieppe chamber of commerce. Hon. Members may have seen the coaches outside the House bearing the slogan "Save the Line".
I am pleased that so many distinguished guests are here today to listen to the debate and to hear the Minister's response. I hope that she will send them away in an optimistic frame of mind, and I am grateful that she has said that she will be able to have a brief few words with the members of the delegation immediately after the debate. I know that her timetable is very tight, and the fact that she has found us a small space is much appreciated both by our friends from Dieppe and by me.
I am also grateful for the support of other local Members of Parliament, especially the hon. Member for Brighton, Pavilion (Mr. Lepper), who is in the Chamber now, and who has initiated an unprecedented statement of support for the ferry from interests on both sides of the channel. All the local Members, from all parties, have contacted me and been supportive. The hon. Members for Pavilion, for Brighton, Kemptown (Dr. Turner), for Hove (Mr. Caplin) and for Hastings and Rye (Mr. Foster), and the right hon. Member for Wealden (Sir G. Johnson Smith), have all signed my early-day motion 1694 on the subject. I notice that the hon. Member for Eastbourne (Mr. Waterson) is also present today, and I encourage him to add his signature.
Let me outline the present position. It has become clear that the port owner, Sea Containers, is not prepared to build a new outer harbour, despite having signed up, literally, to the town's regeneration programme as established through the Newhaven economic partnership, which clearly included that project.
The alternative suggestion was for a deepening of the existing harbour—an idea that came from Sea Containers itself. Yet the company now says that it is not prepared to do that, either, despite the fact that the Government office for the south-east was helpful and flexible about altering the plans for the approved port access road, to be funded through capital challenge, and the county council committed yet more public money to redesign the road.
The county council had done all the work, and was ready to go. Planning permission had been obtained, all the land ownership problems had been sorted out, and extensive landscaping schemes designed. The county then waited almost a year for Sea Containers to deliver its side of the bargain; it waited in vain.
Now that window of opportunity for funding the road has been lost. Also lost, almost certainly, is the well-respected and key local employer, James Fisher, which has been unable to reach a satisfactory deal with Sea Containers, and, I understand, is now negotiating a surrender of its lease. More jobs are being lost.
Most serious is the potential loss of the ferry route that has operated between Newhaven and Dieppe for 173 years. Ho Chi Minh once worked on the route, Lord Salisbury travelled on it to reach his home in France, and Lord Lucan allegedly used it to escape from the country. I hope that the ferry does not disappear, as he did.
Last week, P and O Stena announced the withdrawal of the Elite, the fast craft used on the route. We are now down to one ancient trundling boat, the Cambria, which sails twice a day and is often late. Indeed, it was late this morning. Its timetable is hardly designed to attract extra traffic. The boat used by our French friends this morning left Dieppe at 3.45 am.
The ferry company is in talks with the unions to discuss a range of options, one of which is to close the line altogether. That would be catastrophic for both Newhaven and Dieppe, and for nearby areas in Normandy and East Sussex, including Brighton and Hove, and Eastbourne.

Mr. David Lepper: Does the hon. Gentleman agree that some of us gave our reluctant support to the limited merger between P and O and Stena last year only on the understanding that that would secure substantial new investment in that vital ferry service, and that those of us who did so feel betrayed to some extent by the company?

Mr. Baker: The hon. Gentleman is right. He has hit the nail on the head. People have a right to feel betrayed. They expected a better service from P and O Stena as a result of the merger, and they have not got it. If that service goes, 440 jobs are directly at stake—indeed, some have already gone with the disappearance of the Elite—and the knock-on effect on the wider region would be substantial.
Closure of the line cannot be allowed to happen. All the local authorities and Members of Parliament, in both Newhaven and Dieppe and in their local areas, stand shoulder to shoulder to fight any such proposal.


The French Government yesterday added their support, and I hope that our Government will mirror their attitude today.
I met my opposite number, Mr. Cuvilliez, who is here today, in Dieppe on Monday to discuss the situation. Yesterday he raised the matter in the French Assembly, and I have now provided the Minister's office with a copy of that exchange in advance of today's debate. She will have seen that the French Government have accepted that the matter is
une question grave et sérieuse".
The French Government also suggest that any closure or even diminution of the line might be contrary to the conditions fixed in Brussels at the time of the merger between P and O and Stena. I have already discussed that idea with the Minister for Small Firms, Trade and Industry, and her office subsequently advised me that the Government do not believe that the merger conditions have been breached. In the light of the French Government's response, however, may I ask the Minister to look afresh at the question, and be kind enough to drop a line to other Members and to myself?

Dr. Desmond Turner: I represent a constituency next to the Newhaven area, and Brighton and Hove have a strong interest in the future of the port, which falls within our travel-to-work area. I echo the comments of my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper); he and both I met the management of Stena Line, and were given the same undertakings, which the company has now breached.
I am sure that the hon. Member for Lewes (Mr. Baker) will agree that many commercial complications are involved, and companies are acting with no regard for the impact of their actions on the communities that the port serves. If the line has lost passengers, which it has, precipitately, that is scarcely surprising. The company cannot justifiably use the opening of the channel tunnel to explain the loss, because, as I think the hon. Gentleman will agree, the line has been so appallingly managed that, if the company had set out to deter passengers, it could not have done a better job.
I therefore assure the hon. Gentleman of our support in asking Ministers to do everything that they can to introduce some rationality into the situation so that we can have a future. I am sure that he agrees with me—

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. I have given the hon. Gentleman some leeway, but he must understand that he is making an intervention, not a speech.

Mr. Baker: I do agree with the hon. Gentleman, Mr. Deputy Speaker. I agree with his analysis of the Stena problem, and I am grateful for the cross-party support on the issue. In fact, that was to be my next point.
The level of commitment that Stena showed to the line has waned somewhat since the merger with P and O. The company says that it is experiencing large losses on the line, but there is a strong belief, especially in France, that it is deliberately redirecting freight away from the line and on to its Dover-Calais route. The chambre de commerce believes that £3 million of the alleged £8 million losses is attributable to that alone. P and O Stena has three cross-channel lines. Many people believe that it wants to

save money by operating only two, and has decided that Newhaven-Dieppe is the one to go. We need a clear statement from P and O Stena of its position.
There has also been a complete lack of marketing for the line recently, but despite that, despite problems with the boats, despite poor timekeeping and despite the timetable, about 700,000 passengers were carried last year. They used the line in spite of P and O Stena, rather than because of it, because the line would be successful and make a profit if only investment was made in infrastructure, marketing and achieving reliability.
The problems that Newhaven has at present are largely due to the behaviour of Sea Containers and, to a lesser extent, the ferry company. All aspects of the public sector, in this country and in France, have delivered their parts of the bargain and have consistently shown commitment to, and faith in, Newhaven and the ferry link. I must conclude that we would not be in this situation if the port and the ferry were in public hands. That may sound old Labour, or old Liberal, but it is difficult not to draw that conclusion.
Sea Containers is interested only in Sea Containers. Its strategy over the past 10 years has been minimum expenditure—just enough to deal with maintenance of statutory obligations—while bleeding as much money as it can out of the port. It will not invest in the port, nor can it find a buyer. That is, at least in part, due to the fact that it has grossly over-valued the port at £18 million, and has, I understand, borrowed against it. If Sea Containers sold the port for its real value, the over-valuing would be revealed, so it sits tight and bleeds it dry instead.
Sea Containers' latest tactic is to seek planning permission for land it owns in the strategic gap between Newhaven and Seaford. It wants to increase the value of its land to bring it up to the £18 million figure that it has arbitrarily set, should it receive such permission. In such circumstances, it might invest in the port.
Let me be clear: this is an attempt to blackmail the council into giving planning permission that it would otherwise not countenance. Having said that, the council would of course be prepared to consider any proposals, but they would have to be backed up with legal and enforceable guarantees. Sea Containers must come absolutely clean on its detailed plans for Newhaven, and then stick to what it has said. That has not been the case so far. If those plans are made clear, it will then be for people in Newhaven and Seaford to take a view, and make it known to their elected representatives at all levels.
Sea Containers has told me that it is prepared for one year to run a fast ferry on the route during the summer months, if P and O Stena withdraws. That is welcome as far as it goes, but it is not in any way enough. It appears that Sea Containers wants to cream off the profitable summer trade with a craft that requires little on-investment in the port—more bleeding of the port. I say to Sea Containers, "If you bleed the port too much, you will destroy your own asset. The longer you fail to invest, the more businesses will pull out, and the real value of the port will fall further from the arbitrary £18 million figure."
I should like the Government to intervene before breakfast, before lunch and before dinner, and I have six requests for the Minister. First, will she examine the legal position, to which I referred earlier, in respect of the European Commission? Secondly, will the Government


put pressure on P and O Stena to make its intentions abundantly clear, and to maintain the route at a proper level of boats and investment? Thirdly, will they put pressure on Sea Containers to make its plans clear, and to introduce plans, which it has promised for so long, to invest in Newhaven port?
Fourthly, will the Government consider areas where they could apply for European Union funding for port infrastructure improvements, and support the plans for rail investment through the trans-European rail network, because Newhaven to London is a trans-European rail line? Fifthly, will they consider reallocating the money in capital challenge for the port access road to other port improvements, which could be discussed with the county council and the district council?
Lastly, will the Minister, or one of her colleagues, visit Newhaven to meet people and discuss matters on the ground? I want those six questions answered, but my constituents want one question answered: what will the Government do to keep the ferry going and to save Newhaven? We need a clear and decisive answer today.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson): The hon. Member for Lewes (Mr. Baker) ended his speech with six requests, but there were seven, I think. On the legal position, I will most certainly look into it. On pressure that the Government can bring to bear on the two commercial organisations to which he referred—P and O Stena and Sea Containers—he will be aware that the Government's powers in those areas are limited. I intend to touch on European funding and possible changes to capital challenge later.
On the kind invitation to visit Newhaven, as I have told my hon. Friend the Member for Brighton, Kemptown (Dr. Turner)—I say it now to the hon. Member for Lewes, my hon. Friends the Members for Brighton, Pavilion (Mr. Lepper) and for Hove (Mr. Caplin), and the right hon. Member for Wealden (Sir G. Johnson Smith), who sits on the Conservative Benches—I am happy to meet everyone at the earliest opportunity which is convenient to us all.
The hon. Member for Lewes said that he wished that he did not have to touch on the issues mentioned in the debate. All hon. Members with particular concerns about the port of Newhaven and its surrounding area will share that feeling. Although I am not aware that P and 0 Stena has made any formal public announcement about the future of the Newhaven-Dieppe ferry route, I am aware, as we all are, of the press reports. My right hon. Friend the Minister of Transport raised that issue with Lord Sterling, the chairman of P and O, because of the high level of public concern. My right hon. Friend was told that the company had not yet reached a final decision.
The hon. Member for Lewes detailed the important role that Newhaven plays in linking the south-east region and markets in continental Europe. Newhaven-Dieppe is the shortest and most direct of the ferry routes, and, like neighbouring Shoreham, is a key port for marine aggregates for the construction industry. The port handles 1.3 million tonnes of cargo, including fruit, vegetables, fish and forest products; passengers, to the tune of 841,000; and about 160,000 vehicles. Its importance to the area is clear.
A number of measures have already been put in place to help the regeneration of Newhaven port and Newhaven town, and I thank the hon. Member for Lewes for the warm thanks that he expressed to the Government office for the south-east.
In December 1996, under the pilot capital challenge scheme, East Sussex county council was awarded credit approval of £6.8 million towards the £7.8 million cost of a port access road, to which the hon. Member for Lewes referred. That road was considered to be the key to unlocking Newhaven. However, following discussions between East Sussex county council and its local partners, it has been decided not to proceed with the port access road scheme as originally proposed. I understand that the county council may consider alternative proposals designed to meet the objectives of its capital challenge bid. We will, of course, consider those proposals carefully, but the county council allocation needs to have been used by March 2000.
The wider regeneration of Newhaven includes £6.5 million of the Government's single regeneration budget challenge funding. That remains available for a range of regeneration projects developed to address strategic objectives in the comprehensive economic regeneration of Newhaven, without regard to the capital challenge project.
East Sussex county council also secured a bid through Interreg, the European funding programme, for a £1 million grant contribution towards the port access road. The Government office for the south-east will continue to discuss with our French partners ways of ensuring that the proposed Interreg support for the regeneration of Newhaven may proceed, possibly in some other form.
In addition, Lewes district council has applied to the Ministry of Agriculture, Fisheries and Food for grant to aid the fisheries aspects of the modernisation of Newhaven port. Grant for a feasibility study has already been made under the PESCA scheme, and Lewes district council has been given approval in principle to grant-aid its proposed west quay scheme at 50 per cent. of £1.35 million.
The Interreg proposals have already demonstrated the potential value of co-operation between British and French partners on the future of Newhaven. I welcome the contact that the hon. Member for Lewes has made with Dieppe, and the work that he has put in to ensure that not only are our French colleagues present here today but that I will have the opportunity to meet them, albeit briefly.
I can well understand the disappointment of the hon. Member for Lewes and, indeed, other hon. Members about the possible loss or curtailment of ferry services from the port. However, it would be premature for me to comment on that matter when decisions have not yet been taken by the ferry operator.
The hon. Gentleman touched on new port development for Newhaven. That could be a matter for the port operator, although the new port access road, which is being publicly funded, could serve such a facility if it meets the original aims of the capital challenge bid. However, any development would require approval from my Department. We have seen no plans and there has been no formal application for such an approval, so I cannot comment on the proposal; nor would I want to say how it might be affected by possible changes to ferry services.
All hon. Members who have joined in this debate or made representations to me have touched on the P and O Stena merger. Indeed, my hon. Friend the Member for Pavilion spoke briefly on that subject this morning. As we know, the European Commission has not yet announced its formal decision on the merger. However, the Monopolies and Mergers Commission's findings do not bear out the contention that the joint venture is to blame for the decline of the Newhaven-Dieppe route.
The report recorded Stena's projections of substantial losses for Dover-Calais and Newhaven-Dieppe if the merger did not proceed. The MMC considered that, in respect of freight, the Newhaven-Dieppe service was more likely to remain competitive within the joint venture than outside it. In respect of passenger services, it considered that the joint venture would improve the potential for the continuation of the existing choice of routes.
In view of the uncertainties, prohibiting the merger would not have been warranted. My right hon. Friend the then President of the Board of Trade took account of the fact that the adverse effects identified by the MMC were expected to arise only after June 1999, when duty-free sales are due to end. She also took into account the MMC's view that there were benefits from the joint venture, which would be lost if the merger were prohibited, and that adjustments of cross-channel capacity are necessary as a result of the opening of the channel tunnel.
The MMC's findings suggest that that would not have been an answer to the decline of the Newhaven-Dieppe route. The Secretary of State's powers in respect of mergers under the Fair Trading Act 1973 are limited to remedying the adverse effects specified by the MMC, not other matters, and therefore cannot be used to require continuation of the Newhaven-Dieppe service.
I well understand that all hon. Members are interested in good accessibility to the port of Newhaven. They are keen to know whether the Government have the power to delay closure until matters have been looked into. There is no power in national shipping legislation that enables the Secretary of State to delay the decision of a private company, taken for commercial reasons, to withdraw from the provision of a ferry service in circumstances such as these. However, I have little doubt that, in the light of the meeting that my right hon. Friend the Minister of State has held with the chairman of P and O, and also of this debate, which will be read with close attention, the concerns that are being expressed in the House by representatives of the people who live in and around Newhaven and the port will be closely considered.
Perhaps hon. Members are thinking of circumstances in which a ferry service is provided as an essential lifeline to a remote community, which has no other realistic means of access and where economic life is entirely and exclusively dependent on that service. Those are circumstances that are covered only by legislation specific to Scotland, and limited geographically to the highlands and islands. The Newhaven-Dieppe route, although important to the area, is not the sole means of access or of economic support.
There have been suggestions that the Government might subsidise the service to assure its survival. However, it is not Government policy to subsidise a service that does not fulfil a vital economic lifeline

role—there would have to be no alternative route or method of transport. Clearly, there are other sea routes across the channel, and other means of travel to the continent. We would need to consider very carefully whether a subsidy would be compatible with European Community rules, or whether, on the other hand, it would be a distortion of competition in the market. Clearly, the overriding concern this morning is what is perceived to be the removal of a ferry service, but, as I said, Newhaven is a sizeable port as regards handling cargoes and freight.
Railtrack is investigating the scope to develop several major routes for freight, and, with a group of local authorities, is studying congestion on the south coast rail route from Weymouth to Dover, with the aim of improving services to encourage more use of the route. We are watching that study with close interest. The new freight companies have adopted positive attitudes and ambitious targets, which would quadruple the proportion of freight tonne kilometres by rail in the next 10 years. Rail freight volume has already shown a 5 per cent. growth in tonne kilometres in 1996–97, which is the first such increase in many years.
More needs to be done. We have made it abundantly clear that we are committed to the creation of a strategic rail authority, so that the sort of issues that have been raised here this morning—how we can be best served by our railway infrastructure, where more investment is needed—can be more strategically directed. Indeed, a shadow strategic rail authority will be in operation by next spring, based on the British Railways Board and the Office of Passenger Rail Franchising working closely together under new leadership.
Strategic planning will be an early priority for the shadow SRA, to fill the void caused by privatisation. That work will develop into the strategic plan of the SRA proper. Therefore, it will deal with key long-term issues such as demand, capacity, service levels and investment.
Of course, rail is not the only means of taking people and freight into and out of our ports and it would be grossly improper of me to suggest that. Certainly, our roads play a major part in such movements. The inherited roads programme included a scheme to improve the A27 between Southerham and Beddingham, and representations both for and against were received during the public consultation. A scheme to improve the A26 was withdrawn from the roads programme in December 1995. The A27 Southerham-Beddingham scheme has been withdrawn from the trunk road programme. Problems along that stretch of the A27 will now be tackled in the Southampton-Folkestone study.
We had to examine the environmental impact of all schemes. The Southerham-Beddingham scheme is in a particularly sensitive area environmentally, affecting a site of special scientific interest and the Sussex downs area of outstanding natural beauty, part of which is also designated as an environmentally sensitive area. There was uncertainty about whether the scheme as proposed would have proved the most sustainable solution. For Newhaven and its port, as indeed for the United Kingdom as a whole, the Government believe that we must have sustainable development, and that environmental considerations must always be given the value and importance that they warrant.
The Government are determined to encourage greater use of the railways for passengers and freight. We want improvements in existing rail services and in other


transport infrastructures, not least the inland waterways and short-sea shipping. As the topic of debate is in essence a port, I must point out that we will be publishing a daughter document on ports and another on shipping, after the publication of the integrated transport White Paper.
The Government have made it abundantly clear that our overriding goal is to ensure that we can move more freight not only by rail but by using other modes of transport. On rail, we are examining what further action we can take in the context of our integrated transport policy White Paper. We have already taken major steps by overhauling the freight grants scheme. Shortly after coming to office, we doubled the grant available for moving freight from the roads, and we have increased it by a further £10 million for 1998–99. An initiative to publicise that system has resulted in the take-up of all last year's £30 million. Moreover, £32 million of this year's grant money is already accounted for.
I am sure that the hon. Member for Lewes and my hon. Friend the Member for Pavilion—

Mr. Deputy Speaker: Order. It is time for the next debate.

Doctors

Dr. Ian Gibson: In many professions new discoveries, new evidence, new technologies and new problems require a fresh examination of the skills and knowledge that are needed for training programmes, not only for those who are already in the profession but for those who are about to embark on a career within it.
That is particularly true for the practice of medicine, which has changed dramatically in the past 20 years. For example, the results of keyhole surgery and its effects on bed occupation have been dramatic. Indeed, the new organisational structures of the health service have meant that a re-examination of the roles of general practitioners and hospital doctors is vital.
The next 10 years promise to be equally turbulent, as the human genome project unfolds, information technology explodes, new diseases emerge and the public, whose scepticism has been fanned by media scares of incompetence, start to question the adage that the doctor knows best.
Demands for new approaches to medical education are being made. A modern doctor will, for example, need to understand the human genome project, its relevance to patients and its consequences for health programmes. He or she will have to understand predisposition genes for disease and how patients have an individual genetic profile, which will also be relevant to their offspring. I bet that each profile will, following genetic diagnosis, end up like a passport on a microchip.
The result will be—if indeed GPs survive—that advice will have to be given about life styles, risk analysis and on-going treatment. The effects will reverberate around our hospitals, as informed patients ask, "Why this treatment and not that one?" Demands will be made, based on public knowledge, for the best treatments available. Individual patients will need to receive advice on what happens if they smoke or eat this or that. The effects of global warming on disease patterns will also require local, national and international programmes of health management.
As yet, few GPs or consultants are aware of those likelihoods, and I doubt whether they are much considered in medical education in our universities. Past inadequacies—in, for example, occupational health training, toxicology and nutritional studies—will be mirrored in current medical training programmes.
The new considerations will, of course, involve resource spend—insurance companies are already considering, with eagle eyes, the premium consequences for life policies. Patients will need to be well informed before and after genetic tests are proposed. It is clear that doctors will need education in many new areas.
Some doctors will also want to go into research, as happens in the United States, where clinical knowledge and scientific research go hand in hand, Nobel prizes are won and new strategies for disease treatment are evolved. Such doctor training has given rise to new therapies and treatments, and it should be encouraged in this country. The fossilised, ghettoised methods and attitudes that persist in our medical training will need to be fundamentally altered.
Doctors will need to have other understandings and skills. They will need a knowledge of economics to understand the implications of cost analysis and to make decisions about resource allocation. All hon. Members have heard constituents complaining about how difficult it is to get time with the doctor and to understand what the doctor or consultant has said about the treatments that are available. New communication skills and methods of imparting knowledge should be learnt as part of medical training.
An essential part of training could be a project to follow a patient or family through the medical system, the social services and the benefits system. People who were ill when they went into that process can come out even iller as they try to understand the Child Support Agency, for example—benefit problems and unemployment can impart illnesses. Medics must understand the importance of the effect of social conditions on their patients.
The basic scientific programmes—the clinical, medical and surgical skills of conventional training—are still essential, as was recognised in the General Medical Council's 1993 report "Tomorrow's Doctors". Although a few medical schools have made changes to their curriculums as a result of that influential document, it can be argued that the changes required to equip doctors to function effectively in the 21st century must be radical rather than additions to the existing formula. There is serious resistance from the medical fraternity to changes in a well-established system.
I propose the establishment of a new medical structure—let us call it a school—in which we can design a new curriculum and educational process to meet the training needs of the new doctor. That process must be sufficiently flexible to incorporate future changes in training needs.
Such a training programme would ensure multi-disciplinary educational opportunities, which would enable medical students and other health professionals to share learning and experience. Clinical and theoretical aspects of learning should be integrated throughout the training period, so that reflection and debate are the order of the day. Primary and secondary care experience should be balanced to match the needs of medical employment opportunities.
Another essential area of training should be problem solving. That would facilitate the development of self-directed adult learning, so that individuals can take advantage of lifelong learning in the medical workplace. A curriculum should, at the outset of training, integrate such subjects as the economics of health care and resource allocation with basic science teaching. Current and future technology should be emphasised, as should the transmission of knowledge, management of systems of care and the direct assessment and treatment of health.
The global increase in information technology will aid progress and help to disseminate best practice, so that the best treatment and techniques are available to everyone. The new doctor will have science teaching integrated with behavioural sciences, health economics, ethics and public health and will be involved in wide-ranging discussions of disease and health care. He or she will experience clinical and social care settings with professional development built in.
Such developments will not emerge in current medical schools, so an alternative structure—or school—needs to be established in an environment where there are true

partnerships between GPs, local trusts and health authorities. An environment is needed in which hospitals and educational research establishments can demonstrate excellence in programmes of science, public health, community health and clinical practice, both in teaching and research, so that clinicians prefer research to private patients.
Such an environment exists in the Yare valley in Norfolk, where a research science park nestles alongside a new hospital with the school of health at the university nearby—they all interact with one another. Medical students and other professional health service workers should be trained in such an environment. The new staff are young and enthusiastic—they provide us with a great opportunity to develop a new medical school with a new concept of teaching. Indeed, I am arguing for a new concept in medical schools, with a new medicine, new training and true interdisciplinarity—I wonder whether the Government are bold enough to allow it.

The Under-Secretary of State for Health (Mr. John Hutton): I express my gratitude to my hon. Friend the Member for Norwich, North (Dr. Gibson) for choosing to debate this important subject, and I congratulate him on his constructive and thoughtful speech.
Medical education is a significant in-service activity for doctors and virtually all national health service employers. It is also a major investment. Centrally, about £1.1 billion of NHS funding has been allocated this year in England to support undergraduate and postgraduate medical education, of which £478 million is spent on undergraduate and £621 million on postgraduate education.
Further significant resources support continuing professional development. It is right to describe that as an investment: medical education is an investment in the health and care of our population. That is why it is so important, and why it should be valued so highly.
Let us be clear about the purposes of medical education. They are: to produce doctors who can communicate effectively; make a diagnosis; assess prognosis; recommend or carry out treatment; and work as part of a team. The Government want doctors to continue to learn and develop professionally throughout their careers.
I would like to explain how the Department of Health, the universities, the professional and regulatory bodies, and of course the NHS itself, can achieve that. This debate is about looking forward to the future training of doctors, so I want to focus on the current developments and initiatives that are aimed at improving the training experience of doctors and that reinforce the need for lifelong learning.
Medical education is a continuum, from medical student at one end to experienced hospital consultant or general practitioner at the other. Significant reforms to the undergraduate curriculum are being introduced by medical schools as they implement the recommendations in the General Medical Council's report, "Tomorrow's Doctors".
Those important changes encourage flexibility in curricular design and are intended to ensure that future doctors have an improved capacity to respond to changing patterns of disease and to take advantage of modern


patterns of health care delivery, taking account of the whole individual and his or her place in the family and in society. They give greater emphasis to the amount of teaching in a general practice or community setting, to communication and problem solving skills, and to disease prevention and health promotion.
"Tomorrow's Doctors" also drew attention to the need for medical students to develop an understanding of all aspects of human disorder, including the impact of social factors on patterns of disease and disability, and the psychological effect of suffering and disability on patients and their families. As my hon. Friend said, doctors clearly need to understand the roles, responsibilities and skills of the other caring professions. The Government believe that it is important that an understanding of the value of professional partnerships and a capacity for teamwork should be developed during the undergraduate years and beyond.
All medical schools in the United Kingdom are now in the process of implementing the changes. I would like to reassure my hon. Friend that their progress is being closely monitored by the General Medical Council, which has a statutory responsibility to determine the extent of knowledge and skills required for the granting of primary medical qualifications in the United Kingdom.
The Government are determined that the NHS will have the doctors needed to meet the health requirements of the new century. That is why, on 22 July, my right hon. Friend the Secretary of State announced an increase of approximately 1,000 in the intake of medical students in the United Kingdom. The Government plan to admit approximately 6,000 medical students each year by 2005: an increase of almost 1,000 over 1997. My hon. Friend might also be interested to know that there are now more doctors in training in the NHS than ever before.
Ensuring that we have the doctors we need is not only about the numbers trained. The Government want the creation of new student places to act as a driver to ensure that doctors receive the skills that they need to meet the challenges of the 21st century.
Following graduation from medical school, all doctors spend a year in general clinical training as pre-registration house officers. If that is completed successfully, the doctor is then eligible for full registration with the General Medical Council, which has stimulated an important debate about the nature of general clinical training by publishing its report, "The New Doctor". The report contains important recommendations, which the NHS is working to implement, aimed at improving the educational experience of house officers.
The Government recently introduced legislative changes to allow house officers to spend part of their pre-registration year in general practice. Allowing young doctors to get a proper feel for general practice early in their careers is an important development, and I am pleased to be able to tell my hon. Friend that the first placements have now begun on a pilot basis.
Once they hold full registration, doctors can begin their postgraduate or specialist training by spending two to three years in the senior house officer grade. The beginning of specialist training is a key stage in the continuum that will determine the future direction of a doctor's career.
It is widely recognised that the educational experience of doctors in the senior house officer grade could be improved. The Government's main advisory group on medical education is currently preparing an implementation plan for introducing a series of changes aimed at doing just that.
The changes will improve the supervisory arrangements for senior house officers; set targets for increasing the number of posts in educationally approved programmes and rotations; and ensure that the junior doctors receive the careers guidance that they need to assist them in making important career choices. The General Medical Council will shortly publish its own recommendations for improving the training arrangements for senior house officers.
Following their period in the senior house officer grade, doctors usually complete vocational training for general practice or enter a specialty-specific higher specialist training programme. We all expect a great deal from our GP. Vocational training for general practice is intended to produce doctors who are caring and understanding of patients and their families and committed to keeping up to date with developments in practice and to improving the quality of their professional performance.
As well as being knowledgeable about clinical general practice, the Government also want general practitioners to build on their undergraduate training to ensure that they have an appropriate understanding of the impact of psychological factors on illness and of illness on patients and their families, as well as the social, cultural and environmental factors that contribute to health and illness.
We also want GPs who are skilled in communication and have the ability to listen carefully; to explain matters effectively to patients; and to involve patients in decisions about their health. New summative assessment procedures were introduced earlier this year and must be passed by all doctors training for a career in general practice. The procedures test whether a doctor has the required knowledge and skills.
Significant progress has been made in the past two years in implementing the Caiman reforms of higher specialist training. As a result of those important reforms, for the first time, about 12,000 junior doctors in higher specialist training are now following structured training programmes encompassing flexibility, choice, competition and regular assessments of progress.
The end point of training is now marked by the award of a certificate of completion of specialist training, which, like the certificates of prescribed and equivalent experience for general practitioners, shows that a doctor has completed a training programme to the required standards. In this case, it means that the doctor is now eligible for appointment as an NHS consultant.
The next stage in the process of implementing the Caiman reforms is to deliver the full educational benefits of the changes, which will involve ensuring that, in addition to developing effective clinical skills, higher specialist trainees are able to respond to service changes and to develop further a wide range of competencies, including team working, communication skills, and the ability to identify health needs and understand the opportunities for health promotion.
The pace at which new treatments and clinical techniques are developed, combined with the need to ensure public safety, means that a doctor's education and professional development cannot end with the completion of specialist or vocational training. Independent, fully trained practitioners such as NHS consultants or general practitioners have a duty to maintain and continue to develop their clinical practice. The Government, in turn, have a responsibility, shared with the medical profession and employers, to ensure that appropriate training is available.
My hon. Friend is right to highlight the importance of research in enabling doctors to respond to new discoveries, new challenges and new problems. The national need for trained doctors who are able to apply rapidly expanding knowledge in the biological and social sciences to clinical problems remains paramount. Advances in human genetics will, as my hon. Friend suggests, bring a revolution in health care in the next century. The Government recognise the need to strengthen medical education in genetics at all stages of the continuum of training to ensure that tests are used and interpreted appropriately and efficiently. My hon. Friend may also be interested to learn that the Sanger centre at Hinxton in Cambridge is jointly funded by the Medical Research Council and the Wellcome Trust and is the most prolific public domain institution in the world dedicated to reading the sequences of the bases that make up the genomes of living species.
In publishing their White Paper, "The new NHS", and the recent consultation document, "A First Class Service—Quality in the new NHS", the Government have

set out a new integrated, locally based approach to continuing professional development, which matches the needs of individual health professionals with local service objectives and patient expectations. It has set a target for the majority of health professionals to have personal development plans by April 2000.
"The new NHS" White Paper also introduced a new concept of clinical governance which embraces a range of quality assurance processes, such as clinical audit, and acknowledges the importance of continuing professional development and lifelong learning to the delivery of quality patient care in the NHS. Ensuring that the principles of clinical governance are properly reflected in medical education across the continuum provides a challenging agenda for everyone involved in the future training of doctors.
Patients are entitled to expect safe and effective care and treatment by staff who are expert in what they do. I have described a range of important and exciting developments taking place across the continuum of medical education that will ensure that the health service has the medical work force that it needs to respond both to changes in clinical practice and to increasing public expectation. That represents a substantial investment and provides clear further evidence of the Government's commitment to the long-term future of the national health service.

It being before Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o 'clock.

Oral Answers to Questions — WALES

The Secretary of State was asked—

Territorial Army (North Wales)

Dr. Michael Clark: What discussions he has had with the Secretary of State for Defence regarding proposed reductions in the Territorial Army in north Wales. [56576]

The Secretary of State for Wales (Mr. Alun Michael): With your permission, Madam Speaker, may I first say what a privilege it is to stand here as Secretary of State for Wales, although I wish honestly that it could have been under different circumstances? I am sure that the whole House will join me in paying tribute to my predecessor and to the tremendous work that he did on several serious and difficult policy issues during the past 18 years.
We expect an announcement to be made on the Territorial Army in the near future. I have held discussions with both my right hon. Friend the Secretary of State for Defence and my hon. Friend the Minister for the Armed Forces during the past few days.

Dr. Clark: May I congratulate the right hon. Gentleman on his appointment to high office and wish him well? One of his responsibilities will be to ensure that Wales makes a fair and proper contribution to the defence of the United Kingdom. As the Territorial Army is a cost-effective way in which to provide manpower for the Army, will he do his best to ensure that TA regiments, particularly in north Wales, are preserved rather than reduced in size?

Mr. Michael: Wales has always made a distinguished contribution to the defence of the United Kingdom, and that will continue. I am satisfied that the Secretary of State for Defence and the Minister for the Armed Forces are engaged in ensuring that we have the right pattern for the TA for the future.

Sir Raymond Powell: May I be the first Labour Member publicly to congratulate my right hon. Friend on becoming Secretary of State? I am sure both that all hon. Members will share in those congratulations, and that he will do an excellent job.
Will the Secretary of State tell us what he will do not only for north Wales TA units, but for those in south Wales? The needs remain in Wales for the excellent TA, for its recruitment and for the type of person it recruits. Will my right hon. Friend spend some of his energy on ensuring that it continues its excellent work?

Madam Speaker: Order. I should perhaps remind the Secretary of State that the question refers to north Wales only.

Mr. Michael: I am grateful to you, Madam Speaker, for making sure that I do not overlook that.

My colleagues at the Ministry of Defence are aware of concerns raised in correspondence in relation to both north Wales and south Wales. They are taking account of those comments as they work to restructure the TA, and they are very much aware of the importance attached to the historic traditions and the ethos of our regiments. I can assure my hon. Friend that they will give every care to the situation in north Wales, but will attend to the needs of south Wales too.

Mr. Richard Livsey: May we, too, congratulate the Secretary of State and associate ourselves with his remarks on the excellent work of his predecessor, which was much appreciated? May I also congratulate the Under-Secretary of State for Wales, the hon. Member for Cardiff, Central (Mr. Jones), on his debut this afternoon?
Will the Secretary of State take note of my early-day motion on the future of the Territorial Army in Wales, both north and south? It is an all-party early-day motion, which has the support of Welsh Members of Parliament who do not wish to see both TA battalions go under in the review. Will he also note that Cwrt-y-gollen camp in Crickhowell trained many TA soldiers from north Wales very successfully and is to be closed by Christmas, with the loss of 40 jobs? Will he ensure that the Welsh Development Agency does something about creating employment there, for example, by building new industrial units?

Mr. Michael: Madam Speaker, as you said that I should not stray outside the boundaries of the question, I will not refer to my experiences going over the assault course in Cwrt-y-gollen. These are matters for Defence Ministers, but, as I have said, we are in contact with them and wish to ensure that the outcome of their decisions is the best possible for Wales. I am grateful to the hon. Gentleman for his comments about my predecessor and myself, as well as my hon. Friend the Under-Secretary. It is some comfort to know that I am not the only person who is new and nervous here today.

Mr. Barry Jones: I congratulate my right hon. Friend on his high office, in the knowledge that he has a fine record of public work in Wales. To the business now: will my right hon. Friend make sure that, in my constituency, the drill hall at Queensferry does not close—or else? Will he ensure that the 3rd battalion of the Royal Welch Fusiliers retains a headquarters in north Wales, on the understanding that our community would not accept anything else? But we still wish him well.

Mr. Michael: I am grateful to my hon. Friend, who has always been an example to us all in being absolutely specific about the interests of his constituency and his constituents. He serves them with distinction and never allows us to forget them. He is absolutely specific in his question, but I cannot be absolutely specific in my answer. These are matters that have to be dealt with by Defence Ministers, but I am certain that notice will be taken of the comments that my hon. Friend has made today.

Mr. Elfyn Llwyd: I congratulate the right hon. Gentleman on his appointment. I remind him, as he is a native of Colwyn bay, that, if there are any cuts in the 500-strong complement of the


Royal Welch Fusiliers territorial branch in north Wales, the Colwyn Bay branch will be the first to close. Will he make the strongest possible representations to maintain this fine regiment, which has worked very cost-effectively?

Mr. Michael: The hon. Gentleman, like other hon. Members, makes a good point about the traditions of the TA and the contribution that has been made over the years. When I spoke to my hon. Friend the Minister for the Armed Forces, he made it clear that he was aware of the different aspects and units of the Territorial Army in north Wales and of their traditions. I am sure that the points that the hon. Gentleman makes will be considered most sympathetically.

Business Start-ups

Mr. Damian Green: If he will make a statement about the number of recent business start-ups in Wales. [56577]

The Parliamentary Under-Secretary of State for Wales (Mr. Peter Hain): As measured by VAT registrations, there were 6,240 business start-ups in Wales in 1997.

Mr. Green: The Minister will be aware that business start-ups in Wales have fallen sharply in 1998, as compared with 1997. Given that the Welsh economy is more dependent on manufacturing industry than the United Kingdom economy as a whole and that manufacturing has borne the brunt of the Government's economic mismanagement, which has led to interest rates being higher for longer than they need be, what measures does the Minister hope to take to improve the situation and persuade the Chancellor of the Exchequer to stop crucifying Welsh manufacturing industry?

Mr. Hain: That question comes from a member of a party which presided over record interest rates, record bankruptcies and record job losses, including those in manufacturing in Wales. As for the hon. Gentleman's specific question about what action we are taking, if he took an active interest in Wales, he would know that we have been working closely with businesses throughout Wales to create opportunities for expansion and growth.
I recently attended the Confederation of British Industry conference as a Welsh Office Minister. The right hon. Member for Wokingham (Mr. Redwood) appeared on the stage there, blinking like a gormless alien, as we in Wales have seen him. All the Labour Ministers on the CBI platform were greeted enthusiastically, because they were preaching partnership with business—

Madam Speaker: Order. The Minister should withdraw the slur that he has just cast against another Member of Parliament.

Mr. Hain: I happily withdraw the remark, which was certainly meant not as an insult, but as an example of humour.

Mr. Allan Rogers: Will the Minister take the opportunity of changes in the Welsh Office to look

critically at the policy of refusing help and support to indigenous companies, either to start up or to expand, while giving seemingly endless grants to companies to come in from, say, Japan or Korea? Indigenous companies in south Wales provide a great number of jobs and they need the support of the Welsh Office and the Welsh Development Agency.

Mr. Hain: My hon. Friend makes a strong point about the need for indigenous businesses in Wales to receive proper support. It is important that we redress the balance between support for inward investors and support for home-grown businesses. That is precisely why we have given the WDA new targets to achieve exactly that.

Mr. Dafydd Wigley: Does the Minister accept that, for every one step forward taken after a lot of work by the WDA, the Welsh Office and others, we find ourselves taking two steps backward as a result of the overvalued pound undermining manufacturing industry and leading to the loss of countless hundreds of jobs in every part of Wales and every sector, including agriculture and tourism? Please will he get the message across to the Treasury that, while the pound remains at an unrealistically high level, it will be impossible for us to overcome the economic problems of our country?

Mr. Hain: The right hon. Gentleman speaks with passion about businesses in Wales and I realise that, at the level at which it has been, the pound has caused difficulties for business in Wales. However, the fact is that the pound is coming down: it is now below the level that we inherited from the Conservatives after the last election. The programme of stability set out yesterday by my right hon. Friend the Chancellor of the Exchequer will create conditions in future in which businesses can expand and export with greater vigour and success.

Mr. Nigel Evans: I warmly welcome the Secretary of State to his new position, leading his ministerial team, and I look forward to having a long and constructive dialogue with him over many months to come, without any distractions. Irrespective of where Downing street might wish to send him, I know that he will concentrate on the serious job in hand.
The Secretary of State will know that Barclays bank has just revealed new figures showing that start-ups in the last quarter are 13 per cent down on last year's figure. He will know that there will be no new start-ups in farming. He will know that unemployment in Wales is rising. He will know that exporters find it difficult to export because of the uncompetitive pound and high interest rates. Therefore, will he use his position at the Cabinet table to persuade his colleagues to reverse their policies, which are doing so much damage to businesses in Wales and to the people of Wales?

Mr. Hain: I am sure that my right hon. Friend the Secretary of State is grateful for the sincere congratulations on achieving his new position, if not for the rest of the question. The Government are presiding over a business climate in Wales that is based on more partnerships between Government and business than ever before. The hon. Member need only talk to small businesses and others throughout Wales to confirm that. The record of the previous Conservative Government—


there was an average of 7,689 closures per year during that period—will not occur under the Labour Government, because we are determined to support small businesses.

Farmers (Bankruptcy)

Mr. Lembit Öpik: What assistance he will offer farmers of smallholdings in Wales who are now technically bankrupt. [56578]

The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones): Smallholdings are a responsibility of local authorities, under the Agriculture Act 1970, to help new entrants to the industry. The Government provide support to small farmers for farm diversification and business management in addition to the main common agricultural policy schemes.

Mr. Öpik: I welcome the Minister to his new role. We have had pestilence, floods, storms and economic collapse, and it seems that the Book of Revelations is a better predictor of events than Welsh Office forecasts. Will the Minister at least consider providing a substantial package of support for smallholders who are facing bankruptcy to prevent what could be a massive exodus from the countryside as fanners abandon their trade and leave the land?

Mr. Jones: I recognise that the smallholders and farmers whom the hon. Gentleman represents in rural Wales are experiencing problems. I have met many farmers over the past few months and I have close relatives who have suffered gravely. The Welsh Office has invested £200 million in support for Welsh farming this year. Farmers in the uplands of Wales, who were particularly badly hit, have each received an extra £2,000 of support this year. We are concerned; we are trying to do what we can to support Welsh farming and we realise how important that industry is. Unfortunately, there are further difficulties ahead, but we hope to make progress.

Mr. Huw Edwards: Will my hon. Friend tell the House whether the calf processing aid scheme will be replaced when it expires on 30 November? Will he join me in welcoming the news this morning from the European Standing Veterinary Committee that it is recommending the lifting of the European beef ban? If that is done by Christmas, this Government will have lifted a ban that the previous Government caused to be imposed.

Mr. Jones: My hon. Friend makes an important point about the beef ban. We should not be overly optimistic, although there are grounds for optimism with this morning's majority vote in the veterinary committee. However, the final decision must be made by Agriculture Ministers.
It is useful to note how the constructive dialogue that the Government have pursued in Europe has borne fruit as opposed to the previous Government's approach, which produced nothing but headlines and gave the farming industry no support whatsoever.
The Government believe that there is good reason for ending the calf processing aid scheme on 30 November, but Ministers are carefully considering representations from throughout the farming community about introducing another scheme in the near future.

Mr. Michael Jack: Welsh agriculture faces its worst crisis for 50 years. I welcome the Minister to his post and press him for more specific answers about when he will stop playing fast and loose with the expectations of Welsh fanners and tell them whether the calf processing aid scheme will be extended, whether they will receive an increase in their hill livestock compensatory allowance and whether they will receive any help under agrimonetary determination or marketing schemes. Those are all questions that the Welsh National Farmers Union has asked and to which the Minister has so far replied with tea and sympathy. That will not do.

Mr. Jones: The brass neck of Conservative Members never fails to amaze me. They criticise the Government for our stewardship of agriculture in Wales and the rest of the United Kingdom, when their almost criminally complacent handling of the BSE problem turned it into a major crisis and gave this Government a legacy of agriculture problems that no other Government have inherited. The Government have the interests of British agriculture at heart and will secure improvements in the near future.

Mr. Alan W. Williams: I congratulate my hon. Friend on his new responsibilities and wish him well in his new job. I understand that his Department, with Ministers from England, Scotland and Northern Ireland, is involved in intensive discussions with the Treasury on a package to help agriculture. Will he give us an idea of what may be in that package and of the timing of any forthcoming announcements?

Mr. Jones: Many people in the farming industry in Wales have asked me that question. The Welsh Office has made strong representations to the Ministry of Agriculture. I believe that my right hon. Friend the Minister of Agriculture has listened carefully to those representations. I anticipate that we may hear from him in the near future, but I am afraid that I could not possibly comment on what he may say and when he may say it.

Mr. Cynog Dafis: I congratulate the new Minister on his position and wish him well. Will he acknowledge that smallholders and other farmers are suffering seriously as a result of the way in which supermarkets increasingly dominate the position for their own ends? Specifically, will he examine the way in which, in abattoirs, which are increasingly owned by supermarkets, animals are being graded, not according to objective criteria, but according to the specific needs of supermarkets on any one day? Is not that a total perversion of the whole purpose of grading as a method? Is not that also part of a very worrying agenda—a process in which Meat and Livestock Commission officials are involved—which requires strong and effective Government intervention?

Mr. Jones: The hon. Gentleman makes a serious allegation about the influence of supermarkets. There is a


real problem where, perhaps, a small number of retailers have a powerful hold of the market, and that problem is exacerbated when most of the producers in the market are very small units. There may be a need for producers to exert their power in the market by co-operating to help secure good prices.

Social Services

Mr. Andrew Lansley: If he will make a statement about the funding of social services by local authorities in Wales. [56579]

The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones): In Wales, local authorities do not have budgets that are specifically ring-fenced for particular services and they can take their own decisions on where priorities lie at a local level and what funding can be afforded for social services within the overall sums available.
The Welsh Office has recently published a consultation paper, "Comprehensive Spending Review: Modern Public Services for Wales—Spending Plans 1999–2002", and is seeking views on spending allocations for next year and the baselines for the following two years. Spending decisions will be announced later this year, but, in the meantime, participation in the consultation is very much welcomed.

Mr. Lansley: I am grateful for that reply, but is the Minister aware that Powys county council has budgeted expenditure in this financial year of more than 5 per cent. less in cash terms for personal social services than in the year just past, and that, partly as a consequence, it has halved the budget from which the child protection register is to be funded? What action does the Minister propose to take, in discussion with Powys county council, to ensure that that authority has the resources necessary to ensure protection of children in its area?

Mr. Jones: Last year, local authorities in Wales participated in a process, in consultation with the Welsh Local Government Association, to agree on a formula to allocate resources between them. That formula was agreed by all the local authorities, including Powys, and it is the responsibility of local authorities in Wales to decide how they allocate their resources between their various departments.

Mr. Ted Rowlands: My hon. Friend will be fully aware of the tragic consequences of the recent floods, which have left temporarily homeless almost 200 in the Merthyr and Rhymney valleys. Will he, therefore, consider not only what assistance and support the Government might be able to give to those families, but the possibility of appointing an inspector to inquire into why flood defences failed so badly on this occasion?

Mr. Jones: My hon. Friend makes a powerful point on behalf of his constituents, more of whom suffered in the floods than in any other constituency in Wales. Rainfall in Wales last week was greater than at any other time in the past 20 years. Fortunately, flooding was not as great a problem as it was almost 20 years ago, in 1979, because of the investment that has been made in flood protection.

Nevertheless, I know that people in Merthyr suffered grievously. I shall note very carefully the points that my hon. Friend has made and bring them to the attention of my officials.

Welsh Assembly

Mrs. Teresa Gorman: What estimate he has made of the costs of establishing the Assembly for Wales. [56580]

The Secretary of State for Wales (Mr. Alun Michael): The financial memorandum to the Government of Wales Bill stated that the capital cost of establishing the Assembly was not expected to exceed £17 million and estimated the annual running costs of the Assembly at between £15 million and £20 million in addition to current Welsh Office running costs.

Mrs. Gorman: May I, too, say how nice it is to see a new face in the Cabinet? I hope that the Secretary of State's new appointment does not end up costing him his career in the House. Perhaps, in the budget, he might find some way of commemorating the person who was the driving force behind the concept of an Assembly. However, as only a quarter of the Welsh people supported the idea of an Assembly, and as the Government seem to be having difficulty in selecting a suitable person as their candidate for First Secretary—notwithstanding the qualities of the hon. Member for Cardiff, West (Mr. Morgan)—does the Secretary of State think that there is an opportunity to think again about spending all that money on an Assembly that, in dealing with the affairs of Wales, will have less power than a Bantustan?

Mr. Michael: It is very nice that Conservative Members are showing some interest in the Welsh Assembly. However, it is hardly appropriate for Conservative Members to be giving us advice on how to deal with matters in Wales when two of their number are fighting like cats in a sack for leadership of what will be an insignificant Conservative group in the Assembly. We intend to ensure that the Assembly works well for the people of Wales in delivering our promises to them—which have, over the years, led them to give us such massive support. Leadership of the Assembly will be a matter for the party with the greatest representation in Wales, not for the party that has no representation in Wales.

Mr. Gareth Thomas: Does my right hon. Friend agree that there is now a general expectation in Wales that the National Assembly for Wales will improve democratic accountability, ensure better value for public money and help deliver a proper and effective regional economic policy? Does he agree that, if the Assembly fulfils those expectations, it will pay for itself several times over? Does he agree also that, if the National Assembly for Wales is successful in achieving those objectives, the people of Wales will owe a debt of gratitude to my right hon. Friend the Member for Caerphilly (Mr. Davies), the former Secretary of State for Wales, for his vision and determination in ensuring that the National Assembly becomes a reality?

Mr. Michael: Yes, indeed—my hon. Friend makes a very powerful point. I paid tribute to that work at the beginning of today's Question Time, and on a number of occasions in the past week. There has certainly been a gap in democratic accountability in Wales, which, over many years, many of us have fought to put right. I look forward to the Assembly being very effective in delivering better standards in public service, health, education and job creation for the people of Wales.

Dr. Liam Fox: May I be the last, but not the least sincere, to welcome the Secretary of State to his post? On the wider question of costs, what does he believe would be the cost to the standing of the First Secretary in the Welsh Assembly if he were thought to be a conscript and not a volunteer?

Mr. Michael: It is extremely important that the First Secretary should lead the Welsh Assembly with distinction and vigour. I promise the hon. Gentleman that the Labour party will provide that.

Dr. Fox: We might get an answer from the new Secretary of State if I put the question in a different way. Does the Secretary of State believe that there would be a conflict of interest for an individual serving both as Secretary of State for Wales responsible to the Cabinet and as First Secretary responsible to the Welsh Assembly? Is it possible to serve two masters?

Mr. Michael: The hon. Gentleman obviously did not look carefully at the answers given when those issues were debated in the House before.

NHS Funding Levels

Mr. David Amess: If he will make a statement on the planned funding levels for NHS provision in Wales. [56582]

The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones): Following the outcome of the Government's comprehensive spending review, we announced in July an indicative additional budget of more than £1 billion for health for the next three years. My right hon. Friend is consulting on spending plans for 1999–2002 and will announce his decisions later this year.

Mr. Amess: Will the Minister confirm that, according to the British Medical Association, the concentration of health resources on reducing Labour's record hospital waiting lists is producing clinical distortions, so that patients who need urgent operations must wait longer, while simple procedures are carried out in order to massage the figures?

Mr. Jones: I am pleased to announce that, in the next month in which figures will be published, we anticipate a drop of almost 2,000 in the number of in-patient day cases from August to September and a further drop at the end of October. I am not aware that that has been achieved at the expense of people who are waiting longer.

Oral Answers to Questions — PRIME MINISTER

The Prime Minister was asked—

Engagements

Mr. Brian H. Donohoe: If he will list his official engagements for Wednesday 4 November.

The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Donohoe: Although I welcome the commitment given by the Chancellor of the Exchequer in his statement yesterday to increased investment in key areas of our economy, may I put a specific question to my right hon. Friend? Can he give a specific date for the signing of the contract for the new air traffic control centre in Scotland?

The Prime Minister: I know of my hon. Friend's long-standing interest in this matter and the strength with which he has put it forward because of its importance to his constituency. I cannot give definite commitments as negotiations are continuing, but I understand that final plans are due to be submitted to the Government by the end of November and that, subject to agreeing and finalising the details, the aim is to start construction by mid-1999. That will be good news for Scotland, as much of the construction will be locally sourced.

Mr. William Hague: The Economist's survey of independent forecasts for next year puts Britain at the bottom of the growth league for the whole western world. Why does the Prime Minister think that that is so?

The Prime Minister: It is for precisely the same reasons that it puts us ahead for this year and in three years' time—that is, as a result of the economic cycle. All the forecasts put us ahead for this year and in the future. It is for the same reason that forecasts have been downgraded, for example, for the United States of America—people would not call that a weak economy. The single most important thing that we can do is hold firm to the course of economic stability; the worst thing that we could do is follow the Conservative policy of slashing public spending and reversing Bank of England independence.

Mr. Hague: Does the Prime Minister not think that the fact that those surveys put us at the bottom of the growth league for the whole western world has something to do with the 17 tax rises by the Chancellor, the failure to tackle welfare spending, the tax on savings and pensions, higher-than-necessary interest rates, and the extra £40 billion of business regulations and taxes loaded on to the businesses of this country? If the Prime Minister wants to repeat what he said about forecasts in three years' time, is he aware that, since the Chancellor announced his policies in the summer, independent forecasters have


downgraded growth for this country more than for any other country in Europe and America? Is that meant to be a coincidence?

The Prime Minister: No. It simply is not right either. As a matter of fact, growth forecasts throughout the world have been downgraded. The International Monetary Fund has downgraded world growth. The European Union has downgraded growth forecasts for the EU. Every country is in the same position.
I could do no better than to quote the words of the director general of the CBI. He said:
I don't think this downturn was essentially made in Downing Street. Certainly there is no danger at the moment to believe that we will have recession like in 1991. There are several features of our economic policy which are in a much sounder position than they were in 1990.

Mr. Hague: Why does the Prime Minister not listen to the west midlands chairman of the CBI, who said— [Interruption.] It is interesting how the Government like to laugh at business people in the front line of our economy and take the word of people who sit in offices instead. The chairman said:
We are in for a hard and rocky time.
Why did the Prime Minister not look at the CBI survey that showed business confidence at the lowest for 18 years, or the Item Club that says that 0.5 million manufacturing jobs will go? In the mean time, the Chancellor says, "Do nothing. Worry about nothing. Publish fantasy forecasts." Has not the Chancellor failed to make the hard choices that would allow the full 1 per cent. cut in interest rates that this country needs?
Is the Prime Minister going to look at the actual figures for growth forecasts—maybe we will get him to read them—the survey of all independent forecasts, which shows this country's growth going down faster than any other country's? He can have a look at it after Question Time. Was not yesterday a massive missed opportunity to reverse the blunders of the past 18 months and to do something to save people's jobs and businesses?

The Prime Minister: The short answer to that is no, I do not agree with the right hon. Gentleman at all. As for his claim that we were laughing at the director general of the CBI in the west midlands, let me tell him that we were actually laughing at the right hon. Gentleman. The reason for that is very simple. Everyone knows, as indeed the Chancellor said yesterday, that there is no denial of short-term difficulty, and no diversion from long-term strength. Of course we are forecasting a slowdown in economic growth and that slowdown is being mirrored literally throughout the world. The question is: what is the best way to get us through this economic slowdown. We say that it is to hold firm to Bank of England independence, the £40 billion spending on health and education and the extra spending on infrastructure. We say that it is to keep in place the new deal and the working families tax credit. The shadow Chancellor yesterday pinned his colours firmly to the mast. The Conservatives are now in favour of scrapping Bank of England independence, cancelling the spending next year and

cancelling the new deal and working families tax credit. If any of those things are wrong, let the Leader of the Opposition get up and say so now—[Interruption.]

Madam Speaker: Order. We are carrying on.

Mr. Robert Sheldon: Will my right hon. Friend consider announcing the Government's intention to join the economic and monetary union, without setting a date? Would that not help to underpin the Chancellor of the Exchequer's Budget? Would that not reduce interest rates, reduce the level of the pound, improve investment and lead to that rarest of economic phenomena—a free lunch?

The Prime Minister: I do not agree that there is a free lunch in this set of circumstances. We have made it clear what the policy is. It was set out by the Chancellor last year. It was repeated both by the Secretary of State for Trade and Industry and the Chancellor a few days ago.
That is the right policy for us: to make it clear that the economic circumstances are those of sustainable economic convergence and clear and unambiguous economic benefits. But we would be wise to steer between either saying that we will join irrespective of the economic conditions, or taking the position of the Conservative party, saying that we will never join and we will have a negative, destructive position towards Europe—[Interruption.] I am sorry if I have that Conservative party policy wrong as well, but it is difficult to keep up with it nowadays.

Mr. Paddy Ashdown: The Prime Minister says that the Government's policy on the single currency is clear, but on Monday the Trade Secretary described when we would join the single currency and on Tuesday the Cabinet enforcer rushed round saying that we should wait and see if we join the single currency. Which is the Government's policy?

The Prime Minister: Both the Trade Secretary and the Chancellor of the Duchy of Lancaster outlined the position entirely correctly. To join, the circumstances must be right. Those circumstances are that there is sustainable economic convergence and the economic benefits are clear and unambiguous. The right hon. Gentleman's policy is to join irrespective of convergence and of whether the economic benefits are clear and unambiguous. He shakes his head. He has the chance to ask another question. If his view is that he would join only when the economic benefits are clear and unambiguous, he supports our policy.

Mr. Ashdown: The Prime Minister must answer for his policy. Let me remind him that one of his Cabinet Ministers has said "when" and another has said "if. They cannot both be right. When will the Government realise that this is the most important decision facing our country? The Government cannot abandon leadership in favour of a policy of nods and winks. For as long as they do, the Cabinet will remain confused, the country will remain without a lead and British industry will continue to suffer.

The Prime Minister: Let me repeat: to join, the circumstances must be right. We do not believe in joining


irrespective of the economic circumstances. Those circumstances are that there must be sustainable economic convergence and the economic benefits must be clear and unambiguous. That is a plain and sensible policy. It steers between the extremes of the Liberal Democrats saying that they will join irrespective of the economic circumstances and the Conservatives saying that they will not join irrespective of the economic circumstances. In this case, I think that the third way is right.

Mr. Jim Murphy: My right hon. Friend is aware that, for years, many hard-working families have been stuck in a poverty trap. Those hard-working families will benefit from the working families tax credit, the disabled persons tax credit and the record increase in child benefit. Will he give a clear undertaking that his Government will continue the search for policies that reward hard-working families and in so doing will ignore the protests of the Conservatives, who, while in government, did so little for the families most in need?

The Prime Minister: We shall hold firm to the policies on the new deal and the working families tax credit. There could be nothing more crazy or disastrous in economic policy than to cancel both those items at the moment, because we would be withdrawing support in the new deal at the time of an economic slowdown and we would be preventing low-income families from getting the help and incentives that they need to get into work. I assure my hon. Friend that we shall resist Conservative calls to cancel the new deal and the working families tax credit. They make that case not on economic grounds, but for ideological reasons. The Conservative party is moving further and further to the right, but that is not where the British people are.

Mr. Jonathan Sayeed: With an ailing president, a corrupt economy and an unpaid military, Russia is in dire need of generous international financial assistance. I believe that it is in all our interests to provide it. We fear that terrorists and rogue states may gain access to Russia's weapons of mass destruction—its nuclear, chemical and biological weapons—and use them or threaten to use them against us. Why does not the international community negotiate to purchase some of Russia's weapons of mass destruction, perhaps using the aid budget, and arrange for them to be destroyed under international supervision on Russian soil?

The Prime Minister: I agree with the general anxiety expressed by the hon. Gentleman, but I do not agree with his proposals. We have already shown strongly that we are ready to support Russian reform efforts. The International Monetary Fund has made it clear that it will do so, provided the economic reforms that we have asked for are put in place, otherwise there is a danger of simply putting good money after bad.
We and our partners are already assisting Russian disarmament. The United Kingdom has, for example, supplied specialised equipment for transporting nuclear warheads for destruction. We are leading international efforts to retrain redundant military officers for civilian life. We are encouraging Russia to ratify START 2 and move on with negotiations for START 3—the strategic arms reduction talks. There are many practical difficulties

in buying up warheads; so, together with Russia and our other international partners, we are exploring ways in which to reduce the potential dangers posed by the stockpiles of weapons of mass destruction. That is a better way to proceed.

Mr. Ivan Henderson: Will my right hon. Friend assure me that no Labour Government would wait 18 years before listening to the people?

The Prime Minister: We listened to the people very successfully before the election, and we must carry on doing so.

Sir Paul Beresford: Many extremely able business men in my area are deeply worried. They have many questions because they find the answers that the Prime Minister has given to date to be implausible. I should like to ask just one on their behalf. On one hand, the Prime Minister has downgraded his growth predictions—Treasury predictions are lower, and some of the others that we hear of are lower still—yet on the other hand, the Chancellor is saying that tax revenues for next year will remain the same. At the very least, there is a dichotomy. Will the Prime Minister clarify it?

The Prime Minister: The growth prediction for this year, on which revenues are based, has not been downgraded. It is the growth prediction for next year that has been downgraded. There is a perfectly simple answer to the hon. Gentleman's question. Most business men, including ones in his constituency, would prefer us to abandon any notion of policies that will lead to boom and bust, such as reversing Bank of England independence. Above all, they want to avoid the 7 per cent. drop in manufacturing output that we had under the Conservatives, and the boom-and-bust policies that gave us double-digit interest rates for four years—four years of interest rates of more than 10 per cent.—and interest rates of 15 per cent. for more than one year. That is the policy that we must avoid.

Mr. Michael J. Foster: Does my right hon. Friend agree that the Government's approach to the single currency is good for business and good for Britain? Does he also agree with a constituent of mine, Mr. Neil Bucktin, who wrote:
The Conservative Party no longer wishes to face the future … it is hardly surprising if businessmen turn their attention to Labour"?
Mr. Bucktin is chairman of Worcester Conservative Association.

The Prime Minister: I am in favour of as broad an alliance as possible, as my hon. Friend knows. I would add that, as my right hon. Friend the Chancellor emphasised on Monday, it is important to make preparations so that British business is in the position to handle the advent of the euro, because it will be affected by it. When we came into office, we found no serious preparation had been made by the Conservative party when in government. The worst thing that we can do is stick our heads in the sand, ostrich-like, which is the Conservative party's position.

Mr. Damian Green: The Prime Minister will be aware that, in another place this


afternoon, there will be a vote on whether next year's European elections will operate under the completely undemocratic closed list system that he prefers, or under a preferable open list system, which gives voters some choice. Indeed, I hear talk that he and his colleagues are so worried about the result that Liberal Democrat peers are being invited to vote against their party's policy and in favour of the Government's. Why does the Prime Minister object so much to giving voters choice and the freedom to express individual views on whom they want to send to the European Parliament? Will he admit that, for him, when it comes to competition between open democracy and central control, democracy loses every time?

The Prime Minister: One of the great advantages of having the Home Secretary sitting near me is that he can inform me that the closed list system was pioneered by the previous Government in Northern Ireland.

Mr. David Borrow: Business leaders at the CBI conference in Birmingham this week expressed support for the Government's policy of preparing the economy for possible United Kingdom entry into the single European currency. They also expressed support for the Government's spending plans, and felt that they were sustainable and that cuts in public spending were not required. In view of the policies put forward by the Conservative party on both those issues, does my right hon. Friend agree that it will be many years before that party regains the confidence of UK business?

The Prime Minister: It is important that we hold to the plans for the £40 billion investment in our schools and hospitals precisely because it is the right investment for the future of the country, and because, in economic terms, this is the right time to make that investment. As for the social security spending, the vast bulk of the increase is accounted for by uprating pensions in line with prices, and by uprating child benefit; I assume that the Conservatives now oppose doing both. The shadow Secretary of State for Social Security has told us that he opposes the working families tax credit—

Mr. Iain Duncan Smith: Keep family credit.

The Prime Minister: The hon. Gentleman says that we should keep family credit. The opposition make policy as they go along—[Interruption.] Even if they are not listening to the people, at least they are listening to me. That is an advance, I feel.

Mr. Duncan Smith: We created family credit.

The Prime Minister: The hon. Gentleman says he is in favour of family credit, yet the vast bulk of the remainder of social security spending is the old family credit. He says that he opposes the new working families tax credit, which gives better help to low-income families. What a ridiculous economic policy to have.

Mr. William Hague: Last week, the Prime Minister said that, when the Jenkins report was published, he would be able to say whether he would meet

his commitment to have a referendum in this Parliament. Now that the report has been published, is the answer yes or no?

The Prime Minister: The answer is as set out by the Home Secretary last week. As for the timing, it has always been envisaged that it would be before the next election. That remains an option, but obviously, in the light of the specific nature of the Jenkins recommendation, as the new system cannot be introduced until the election after next, that remains an option too.

Mr. Hague: What is wrong with yes or no? Let me remind the Prime Minister what he said last week, when I asked him whether he was still committed to a referendum in this Parliament. He said:
We have made it clear that we will state our position when the Jenkins committee reports tomorrow."—[Official Report, 28 October 1998; Vol. 318, c. 329.]
Now he still does not have a position. Is that not because the Jenkins commission served up a dog's breakfast for the voters of this country? As the Prime Minister is fond of quoting the Home Secretary, I remind him that the Home Secretary said last week that the recommendations were much more complicated than the Government had expected. Does he agree with his Home Secretary about that?

The Prime Minister: What I actually said to the right hon. Gentleman was to wait and see what the specific recommendation was. It could have been for a system that could have been introduced at the next election, but as a matter of fact the report recommended a system that cannot be introduced until after the next election. That is why I have set out the policy. It is perfectly clear. If the right hon. Gentleman does not agree with it, that is up to him.

Mr. Hague: The Prime Minister wants the country to have a preferential voting system, but he cannot state a preference between yes and no. He has now avoided two simple questions, one of which was only whether he agreed with the comments that the Home Secretary made last week. He cannot say anything with any meaning on the subject because half his Cabinet and half his party disagree with the proposal. We can understand the attractions for him of a voting system that would get rid of a lot of them, but he has the Chancellor's economic policies to do that; he does not need the Jenkins commission. Why does he not now abandon the ludicrous nonsense of trying to gerrymander our voting system?

The Prime Minister: I notice that the right hon. Gentleman is rather happier talking about that than about the economy. The Tories' position is clear: they do not want a discussion, they do not want a debate, they do not want any change—but they are always against constitutional change. They were against devolution in Scotland and Wales; now they are in favour. They were against a freedom of information Act, and against reforming the House of Lords. I am more open minded. I prefer to let a debate happen.

Mr. Harry Barnes: Does the Prime Minister agree that decommissioning of weapons in Northern Ireland is not the same as surrender?


It occurred with terrorist groups in El Salvador and in the Lebanon in 1991. Should not there now be a timetable— the sooner, the better—so that we get rid of weapons in Northern Ireland?

The Prime Minister: I would like decommissioning to start immediately. That has been the position of the Government all the way through, and remains the position. I hope that we can find a way through the current impasse which ensures that everybody has the confidence of knowing that, when they are engaged in negotiations about the future in Northern Ireland and, in particular, when they are engaged in matters to do with the government of Northern Ireland, they can be sure that those with whom they are negotiating and discussing those issues have given up violence for good.

Mr. Richard Livsey: Will the Prime Minister use his good offices and his friendship with the new German Chancellor, Gerhard—[Interruption.]

Madam Speaker: Order. Mr. Skinner, order.

Mr. Livsey: I knew that he was connected with banking—Gerhard Schroder.
Will the Prime Minister do everything that he can to lift the ban on British beef exports? Did he raise that subject with Mr. Schroder on Monday, when they met? Is he aware that the European Union Standing Veterinary Committee today voted in favour of the date-based scheme, but by an insufficient majority? Will he proceed to ban the beef war and, indeed, sign the armistice soon, before Christmas?

The Prime Minister: I am pleased that the hon. Gentleman is on first-name terms with the German Chancellor. I certainly raised BSE with him. There is not a single Prime Minister, Minister, head of state or Head of Government anywhere in the European Union who does not get the full lecture on BSE, every time that I see any of them. On the BSE position, we had a simple majority of states in favour of lifting the ban. That is important, because it means that, if we hold that majority when we come to the Council of Ministers meeting, the Commission proposal, which, obviously, we support, goes forward.
We hope to do even better than that, but there is a lot of hard negotiating to do. Today's simple majority in our favour, although not enough to achieve a conclusion today, is a big step forward. We have to do an awful lot now, in terms of the measures that my right hon. Friend the Minister of Agriculture, Fisheries and Food is discussing with the farming industry and within the European Union, to help our farmers through the next few months.

Shona McIsaac: Will my right hon. Friend sort out a mathematical conundrum for me? I have a report from my local newspaper in which the Tories claim that waiting lists at Grimsby hospital have increased, yet the hospital has confirmed that the decrease is more than 1,300. Will he send his congratulations to the hospital on that marvellous achievement, and send the Tories to numeracy classes?

The Prime Minister: I am happy to do at least the first of those. Waiting lists are coming down, in my hon.

Friend's area and in other areas, too. They were rising, year upon year, under the Conservatives. If we had proceeded with the Conservative plans to cancel the extra investment—the £40 billion in schools and hospitals—waiting lists would be even worse. There is only one party in whose hands the national health service is safe, and it is the labour party.

Mr. Andrew George: Does the Prime Minister agree that the multilateral agreement on investment, if resurrected by the World Trade Organisation, would be nothing more than a solution without a problem? Does he believe that his friend in France, Mr. Jospin, was right or wrong to withdraw French Government support from the MAI?

The Prime Minister: We have made it clear that we support achieving agreement. I do not agree with the hon. Gentleman that the MAI is a solution without a problem. All these measures are part of trying to break down barriers to trade between countries. This country is a trading nation, and it is in our interest to have trade that is as free and open as possible. I would have thought that that was in the best traditions of the Liberal party.

Ms Linda Perham: Will my right hon. Friend welcome the Wye Plantation agreement on the middle east and congratulate all the parties involved? As he knows, the problem with the Oslo accords has been getting the backing of the people for the agreement. Will he and our European Union partners do their best to assist the process and ensure that there is a lasting peace in the region?

The Prime Minister: I am happy to congratulate President Clinton and all those who were involved in negotiating the Wye memorandum. We will do all in our power to support the agreement. We will be discussing options for European Union action at the General Affairs Council on 9 November. Certainly, as far as the EU is concerned, we stand ready to play our part. The agreement was a tremendous achievement and it is important that the memorandum gets the support of as many countries as possible. I have already discussed it with Chairman Arafat and Prime Minister Netanyahu and I look forward to doing so again.

Mr. Tim Collins: If global factors were the reason for cutting the growth forecast for 1999, what global factors justify increasing the forecast for 2000?

The Prime Minister: Precisely because—if the hon. Gentleman had bothered to research his question more closely he would have known-all forecasts are for a slowdown next year and a pick-up in growth later. The reason is that, because of the global financial crisis, there is an effect in Asia and 25 per cent. of the world is in recession, but, in time, recovery will happen. Therefore, it is important to steer the course of stability that we have outlined, and not to engage in the panic-stricken policies of the Conservative party, which would reduce the possibility of lower long-term interest rates by scrapping the independence of the Bank of England and cancel the investment that we have made. At some point in time, it would be interesting to have a coherent economic policy from a coherent Opposition.

Speaker's Statement

Madam Speaker: I have a short statement to make to the House. I see from the number of red poppies in evidence that it has not escaped the attention of hon. Members that next Wednesday the House will be in session at 11 am on 11 November. I regard it as appropriate for the House to join the nation in observing the two minutes' silence at that time to remember those who gave their lives for their country and to preserve our democratic freedom. I shall be in the Chair at that time and I invite hon. Members to join me on that occasion. I hope that similar arrangements will be made in Committees. Instructions will be issued to heads of department that members of staff who are working and who want to observe the silence will be enabled to do so.

Points of Order

Mr. Alex Salmond: On a point of order, Madam Speaker. Have you had any intimation that the Secretary of State for Trade and Industry may make a statement on the implications of the millennium bug for vital services? A letter has come into the public domain today from the Secretary of State for Scotland to the Secretary of State for Defence. Apart from showing that the former seems to receive the mushroom treatment in the Cabinet—kept in the dark, with all the implications that flow from that—the letter expresses the right hon. Gentleman's fears that vital services such as electricity and telecommunications may be severely interrupted and that the Territorial Army will no longer have sufficient strength to respond to civic emergencies in some parts of the country.
That view is different from the view that the Government have expressed on the implications of the millennium bug. Is that now the Government's position—or is the Secretary of State for Scotland out on a limb again? At the very least, we should have an immediate statement from the Secretary of State for Trade and Industry to clarify the position.

Madam Speaker: I have not been informed that the Secretary of State wants to make a statement today. The hon. Gentleman can seek a statement either through the usual channels or perhaps in a question to the Leader of the House in business questions tomorrow.

Mr. Gerald Bermingham: On a point of order, Madam Speaker. On Monday, in a question to the Leader of the House, I mentioned the number of questions that the Leader of the Opposition asks at Prime Minister's Question Time and the amount of time taken. Today, that amounted to six minutes in the first half and four minutes in the second—exactly one third of the time was therefore taken up by questions from the Leader of the Opposition. That cannot be right, as all hon. Members have equal status in the electorate's eyes. May I urge you, Madam Speaker, to use your good offices to arrange either for fewer questions to be asked or for someone to give instruction on how to ask short and pertinent questions?

Madam Speaker: The Leader of the Opposition is entitled to ask six questions at Prime Minister's Questions, but daily I plead with hon. Members to ask brisk questions and with Ministers to give brisk answers. I am afraid that, most of the time, my pleas fall on stony ground. However, I am pleased that some hon. Members are noticing the fact that we are not getting through the Order Paper at Question Time as quickly as we should, not only at Prime Minister's Questions but daily.
I place on record again my plea to all hon. Members—whether they are Front Benchers or Back Benchers—for brisk questions. Surely hon. Members can work out a question before they come into the Chamber, so that they know what they want to say instead of rambling on. I hope


that Ministers, too, will take my admonitions to heart, as their answers tend to be far too long—quite unnecessarily so on many occasions.

Sir Peter Tapsell: Further to that point of order, Madam Speaker.

Madam Speaker: Yes, Sir Peter—I hope that you are going to support me.

Sir Peter Tapsell: Indeed I am, Madam Speaker. I am going to go even further and suggest that the solution to the widely acknowledged problem of Prime Minister's Questions is that we should revert to the practice of having them on Tuesdays and Thursdays. Will you support the House by making representations to that effect to the Prime Minister?

Madam Speaker: I will certainly let the Prime Minister know of the hon. Gentleman's point of view.

Housing (Home Repossessions)

Mr. Adrian Sanders: I beg to move,
That leave be given to bring in a Bill to enable and require the Housing Corporation to be joined in all possession proceedings by mortgagees against mortgagors in respect of the principal home of the mortgagor and his family.
The aim of the Bill is to reduce the social and welfare costs of repossessions by enabling people to keep their homes. It explores a way forward to find a more humane and, in the longer term, cheaper method of dealing with repossessions.
The Bill is timely, as the number of actions entered for repossession is rising once more and, given current economic trends, will continue to rise. Although no one expects the numbers to reach the levels of 1991 and 1992, each and every repossession is a human tragedy and a drain on the Exchequer. The Bill is also timely because of the Government's concerns about family breakdown.
Between 1969 and 1980, the number of repossessions a year was, on average, about 3,400. That number rose steadily to 26,390 in 1987 before falling to 15,810 in 1989. Between 1989 and 1991, there was an almost fivefold increase—to 75,000—in the number of repossessions. Since 1991, the number has decreased, although figures for the first half of 1998 show a small increase on those for the first half of 1997. Now, therefore, is the time to act.
People fall into mortgage arrears for a number of reasons, of which loss of income is by far the most common—it is cited in 70 per cent. of cases. A quarter of people in arrears mentioned as a factor household changes such as the loss of a partner, pregnancy or a new baby. A further quarter mentioned increases in mortgage or other regular repayments, although those reasons were rarely given in isolation.
There are added pressures on borrowers who fall into arrears. Government policy has run against the most vulnerable groups of householders. The previous Government cut the availability of income support for mortgage interest; new borrowers who lose their jobs now have to survive for the first nine months of unemployment without such help.
The change was intended to prompt a significant increase in the use of private insurance, which would replace the safety net of income support. Before the October 1995 changes, take-up of private insurance was between 12 and 16 per cent. The highest estimate of current take-up is 21 per cent., but according to the Chartered Institute of Housing that may be overstated.
The critical issue is whether those most at risk are likely to be insured. The evidence shows that they are not. About a third of borrowers would be eligible for income support if they lost all their income; of those, three quarters have no mortgage protection insurance, so at least a quarter of all borrowers have no protection and no means of paying for up to nine months if they lose their income.
A related issue is the effectiveness of private insurance. About 20 per cent. of claims are not met. That may be for legitimate reasons, but in some cases claims are rejected because of pre-existing conditions, which gives cause for concern about mis-selling. Home buyers are less secure than they were before the most recent recession.
Mortgage interest rate support has fallen further behind most people's actual repayments. The basket of interest rates used in the calculation for support includes only building societies and not the mutuals that have converted to banks, with their generally higher rates. Add in the delay between interest rate changes and the recalculation of income support, and one does not need a crystal ball to see that mortgagee arrears among welfare-dependent home owners will continue to rise.
The financial cost to those whose homes are repossessed is significant: there are legal expenses; interest payments on arrears; court fees and administration costs involved in fighting possession orders; and of course debt on the property, which the borrower will continue to owe.
The costs to the welfare budget include increased demand for social housing, through people applying directly to registered social landlords or going through the local authority homelessness route; increases in the housing benefit bill; the cost to local authorities of housing families in temporary accommodation; and the administrative costs of letting properties. It has been estimated that between 1990 and 1994 25 per cent. of households were initially rehoused in the social housing sector following repossession. Repossessions currently account for about 10,000 social housing units.
The personal cost should also be considered. Repossession leads to increased stress, which can lead to relationship breakdown and greater demand for health services. Children may have to change schools through having to move, and the emotional impact can lead to disruption in educational progress.
When courts make repossession orders, a social renting option is not considered, but for some people a conversion to rent, or even partial rent and shared ownership, could be the answer that allows them to stay in their home until financial circumstances improve. The Bill proposes that the court be allowed to consider the option of the lender's interest in the home being bought out by the Housing Corporation or another appropriate body, which would then rent the house back to the family or even grant a mortgage.
The Bill's requirements are not onerous. The court already has at its disposal the relevant evidence and an expert witness. District judges have a lot of experience in repossession matters. The Bill would allow the court to consider more options, and could result in a practical and humane resolution. It could hold out to families the hope that they could become home owners once again.
If we are to avoid a repetition of the misery experienced by thousands of households in the early 1990s, the time to act is now.
Question put and agreed to
Bill ordered to be brought in by Mr. Adrian Sanders, Mr. A. J. Beith, Mr. Chris Pond, Mr. Steve Webb, Mr. Martin Bell, Jackie Ballard, Mr. Peter Luff, Mr. Nigel Jones, Mr. Stephen Twigg, Mr. Mike Hancock, Mr. Barry Gardiner and Mr. Paul Burstow.

HOUSING (HOME REPOSSESSIONS)

Mr. Adrian Sanders accordingly presented a Bill to enable and require the Housing Corporation to be joined in all possession proceedings by mortgagees against mortgagors in respect of the principal home of the mortgagor and his family: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 254].

Opposition Day

[20TH ALLOTTED DAY]

The Economy

Madam Speaker: I have selected the amendment standing in the name of the Prime Minister.

Mr. Francis Maude: I beg to move,
That this House notes that there is now a black hole in the public finances; that the increased burdens on business since the General Election now account for £1,500 more per employee; that the UK will be the first major European economy to suffer a serious downturn and the worst affected; further notes that the Government is squandering the last Government's golden economic legacy by its four basic blunders of increased taxes, attacks on savings, particularly pensions, excessive regulation of business and irresponsible public spending; and deplores the Government's complacent attitude to the handling of the economy and public finances.
The highest responsibility of the British Chancellor of the Exchequer is to tell the truth about the British economy and to set out for Parliament and the people the real prospects, the real problems and some real answers. Yesterday, the Chancellor casually abandoned that responsibility. He thought he could carry on for ever spinning a web of words that would protect him from reality. Yesterday, he had a duty to tell the truth, but we got a fairy tale.
The responses of economists and commentators to the Chancellor's forecasts have spanned a wide range, from scepticism to outright disbelief. What has caused most disbelief is that he not only downgraded his forecast for next year by much less than the consensus, but he—almost alone—has upgraded his forecast for future years. What has happened between June, when he made his last forecast, and now to encourage him to upgrade his forecast for future years? The clear answer is that he was becoming aware that, with growth on a downward path, a black hole was appearing in the Government's public finances.
The analyses that have been done by outside commentators, by the National Institute of Economic and Social Research, by Goldman Sachs and by many others show that the Chancellor is seriously at risk of failing to meet his supposed golden rule. The growth forecasts were crucial to his analysis and it was crucial for his credibility with Labour Members that he produced figures that showed that a black hole did not threaten the economy. So what did he do? He performed a classic bit of results-driven analysis. Instead of the usual process of rubbish in, rubbish out, Ministers got the rubbish out first and decided separately how to put the rubbish in.

Mr. Barry Jones: Will the right hon. Gentleman give way?

Mr. Maude: I shall continue to outline my argument for a little while longer, if the hon. Gentleman will allow me. That process is why we have had that incredible upgrade of future forecasts and why the responses range from scepticism to disbelief. Bronwyn Curtis of Nomura says:
Clearly his growth forecasts are much more optimistic than the market's … forward looking surveys suggest output has fallen off a cliff.

The National Association of Pension Funds says:
The growth forecasts are a hostage to fortune
Paribas says:
Our central forecast is for 0.9 per cent. growth and we think all the risks"—
not the balance of risks, but all the risks—
are on the downside. The chancellor's central forecast is for 1.25 per cent. growth. I hope he is right, but I believe he is wrong.
HSBC says:
There's not a case for growth turning round in the following years.
However, that is the central assertion the Chancellor makes and on which he bases his optimistic outlook. Anthony Hilton, the city editor of the Evening Standard writes today:
What is going to happen to put the British economy back on to its sustainable growth path? Why should it bounce back so soon and so conveniently when the rest of the world economy may be going to hell in a handcart… it was 'Crisis? What crisis?' all over again.
Philip Stephens writes, in that well known Labour-supporting newspaper the Financial Times:
We shall know soon enough whether Mr Brown's gamble on optimism pays off. I hope so, but I fear not. The danger is he will become trapped in his own rhetoric.

Mr. Barry Jones: When I first came to the House, the right hon. Gentleman's father was a Conservative Front-Bench spokesman who displayed great courtesy and was always unflappable. He demonstrated his mordant wit both in the Chamber and at his party conference. The son is not as good as his father.
Will the right hon. Gentleman tell my right hon. Friend the Chancellor to his face that he welcomes the £250 million for our national health service?

Mr. Maude: I am sorry that the hon. Gentleman spoilt what I took to be an affectionate tribute to my late father, which I appreciated.
The hon. Gentleman asked whether I supported the extra money for the health service. Contrary to what the Chancellor has repeatedly asserted—I heard him do so again on the radio this morning although he knows that it is not true—and contrary to what the Prime Minister said at Question Time, we have welcomed the increases in spending for health and education. We did so at the outset, and we have done so again. Let there be no doubt about it: that is what we say, and we shall say it again. The Chancellor can carry on, but Adlai Stevenson's old phrase applies: if he stops telling lies about us, we will stop telling the truth about him.

Mr. Derek Twigg: The Opposition's motion refers to "irresponsible public spending". What would the right hon. Gentleman cut from the £40 billion allocated to schools and hospitals?

Mr. Maude: I suggest that the hon. Gentleman re-read his election manifesto, and the words of his Prime Minister. I can well understand that many other people do not believe what the Prime Minister says, but I should have thought that the hon. Gentleman would believe it.
The Prime Minister said that Labour would increase spending on health and education by cutting social security bills. The Treasury engaged in a fierce argument over social security spending for a year with the then Secretary of State who, against all the odds, defeated it, a feat for which she was dismissed.

Mr. Twigg: Answer.

Mr. Maude: The hon. Gentleman has his answer.
The Chancellor has made a reckless three-year commitment on money that our economy has not earned. Problems are coming down the track as a result.

Mr. Twigg: Answer me.

Mr. Maude: I shall give the hon. Gentleman a specific answer. We do not believe that family credit—a good system that has worked well—should be abolished to be replaced by a system that will, for example, entitle some families who are higher rate taxpayers earning up to £39,000 a year to receive tax credits and welfare benefits. If the hon. Gentleman wants to say that a system that takes money from people at 40 per cent. on the one hand and gives them a welfare benefit with the other is a good use of taxpayers' money, let him stand up and do so.

Mr. Twigg: I am grateful to the right hon. Gentleman for giving way again. Will he say specifically what he would cut from the £40 billion allocated to schools and hospitals?

Mr. Maude: The hon. Gentleman should simply read his election manifesto. I assume that he stood on the same manifesto as his colleagues. It contained a clear commitment, which the Labour party has broken.
I was encouraging the Chancellor by referring him to some of the comments that have been made about yesterday's statement. No one believes that his downgrade of the economic forecasts to a mid-point of 1.25 per cent. is at all credible. The poll of forecasts in The Economist—a serious piece of work, regularly done among independent forecasters in the UK and other countries—finds a mid-point of 0.8 per cent. The most recent Treasury consensus of outside forecasters shows a mid-point of 0.9 per cent. How the Chancellor can justify making a forecast for the economy that is above all of those no one in the outside world can understand or believe—and I hope that the next intervention will be a little more sensible.

Mr. Geraint Davies: Will the right hon. Gentleman confirm that that same independent group of forecasters was forecasting a growth rate of 1.4 per cent. when, in fact, the revised projection for 1998–99 is 2.25 per cent?

Mr. Maude: The hon. Gentleman should look at what the forecast says. The consensus group suggests that the most recent forecasts—those made during October, which is the most up to date—come out at a mid-point of 0.9 per cent. How does the Chancellor reconcile that with his mid-point forecast of 1.25 per cent? It just does not add up, and he knows it.
The reality is that the Chancellor has made these numbers up to justify his public spending figures. There is one league that the Chancellor has come out top of. He has come out top of the fantasy forecast league.
To sum up the response, there is none better than Bridget Rosewell, the director of Business Strategies, who said:
A combination of nice words signifying little, with an attack on business … set against forecasts nobody believes.
What coloured the Chancellor's statement and all his pronouncements, and those of his team since, has been arrogant complacency. He thinks that it is all right just to use the language. It was interesting to run a word count on yesterday's statement. Poor old "prudence" is down to only 10 mentions now. She is on the way out—bit out of favour now, as if we did not know. She has been replaced by the Chancellor's new best friend "stability". She rated 14 mentions in the course of his speech. The clear winner of the word count race was "long term", with a record 18 mentions. Well, that is pretty rich from a Chancellor whose idea of the long term is what is in next week's headlines.

Mr. Ian Stewart: Will the right hon. Gentleman give way?

Mr. Maude: In a moment. I shall just point out something else that will interest the hon. Gentleman.
We searched and searched for one word that I thought must feature in the Chancellor's statement. It is high in the minds of countless people up and down the land. He knows the word pretty well; he used to use it a great deal. That word is "unemployment". That is what he left out. There was not a single mention of unemployment, not a single mention of job losses, not a single mention of redundancies; and even more shamefully, not a single measure to prevent unemployment.

Yvette Cooper: Will the right hon. Gentleman give way?

Mr. Maude: In a moment, once I have given way to the hon. Member for Eccles (Mr. Stewart). What a slap in the face for people facing day by day, thanks to the Chancellor's policies, the prospect of losing their job and their livelihood! They will have been disgusted by his complacency.

Mr. Ian Stewart: Does the right hon. Gentleman believe that it is a useful use of a shadow Chancellor's time to count words—and then only three?

Mr. Maude: I will let the hon. Gentleman into a carefully guarded secret. One can do a word count on a computer very easily now. The Chancellor spent half his time yesterday prating on about information technology, about which he seems to know a little. At least he has heard of it. The hon. Gentleman does not seem to have heard of it

Yvette Cooper: If the right hon. Gentleman cares so much about unemployment, why does he want to cut the new deal and the working families tax credit, which make work pay for working families?

Mr. Maude: The hon. Lady has' learnt the soundbites very well. I commend her. She is very new Labour—learn


the soundbite and forget about the substance. The reason is that the new deal pilots have not worked. That is why we think that it is a waste of public money and a fraud perpetrated upon a great many people.

Ms Margaret Moran: Will the right hon. Gentleman get his abacus out and, instead of counting words, count the 300,000 people who by next year will have been assisted by the new deal? That is about employment, not unemployment, on which the Conservative Government had such a poor record.

Mr. Maude: If the hon. Lady thinks it matters so much, when she goes back to her constituency this weekend and people talk to her about job losses and the threat of redundancy and say, "Hang on, I didn't hear the Chancellor say much about that in his statement on Wednesday," what is she going to tell them? Is she going to say, "It's all right—he just doesn't care about it"? She is going to have to defend the Chancellor, whose policies are creating unemployment and job losses every day of the week. He did not think it mattered; he did not bother to mention it.

The Chancellor of the Exchequer (Mr. Gordon Brown): First, will the right hon. Gentleman recognise that welfare to work and the new deal are tackling unemployment? Secondly, will he recognise that there has been a 30 per cent. fall in unemployment in his own constituency over the past 18 months? Will he now give us straight answers to the following questions? Is he saying that the Conservative party is going to go into the next election to scrap the new deal? Will he confirm that he will go into the election to scrap Bank of England independence? It is about time we had some answers.

Mr. Maude: The right hon. Gentleman comes here crawling for advice on how to get out of the mess he got himself into. If he is so interested in Bank of England independence, why does he not ask the Chief Secretary to the Treasury whether he believes in it? Why does he not stop the Chief Secretary making gaffe after gaffe, when he stands at the Dispatch Box or goes on the radio telling the Bank of England that it should cut interest rates? If he cares so much about Bank of England independence why does he not do what the Bundesbank or the American Fed do—have people appointed for eight years or 14 years? He knows that members of the Monetary Policy Committee were appointed for three years by him and that their appointments will come up for renewal before the next election. Is that independence?

Mr. Brown: Will the right hon. Gentleman answer the questions? Will he scrap the new deal and will he scrap Bank of England independence? The Leader of the Opposition did not answer those questions, so will the shadow Chancellor have the courage to tell us?

Mr. Maude: What I shall tell the right hon. Gentleman about Bank of England independence is that he has made a botched job of it. He has bungled it. He does not believe that it works and nor does the Chief Secretary, which is why his adviser spent his time in Washington briefing, behind his hand, against the Bank of England; and why

the Chief Secretary goes on television and stands in this Chamber putting pressure on the Bank to change its policy and cut interest rates. They do not believe in Bank of England independence, that is for sure.

Mrs. Teresa Gorman: Is my right hon. Friend aware that the chairman of Marks and Spencer does not agree with the Chancellor either? He has announced that the company will have to transfer much of its manufacturing to other countries because the current Government have imposed so many regulations and extra costs on the company that it can no longer afford to buy British. Is my right hon. Friend also aware that the chairman of Marks and Spencer yesterday reported a fall of a quarter in the company's profitability and said that we were in for a rocky ride? Perhaps my right hon. Friend would like to give his opinion on whether the Chancellor or the chairman of Marks and Spencer is better at predicting the future.

Mr. Maude: My hon. Friend makes the point that, week by week, many companies for which Britain used to be the best location for manufacturing and doing business are deciding that they do not want to do business in Labour's Britain. That is sad, because it means that the businesses on which people's jobs depend are failing.

Ms Gisela Stuart: Will the right hon. Gentleman give way?

Mr. Maude: No. I want to make some progress and I have already given way many times.
The Government's arrogant complacency continues. As late as this morning, the Secretary of State for Trade and industry said that business was "upbeat". He said that on the same day as the latest survey by the Chartered Institute of Purchasing and Supply showed the slowdown spreading from manufacturing to the service sector. The CIPS director general said that
growth in the service sector continues to decline as the level of new business has fallen. Both business and consumer confidence are deteriorating.
That is not the only such survey—the Institute of Directors survey tells a similar story.
Labour Members might not like it and they might prefer to rest on the warm words that flow endlessly from the Chancellor, but that is the real world in which people have to live, work and do business. It would be helpful if they recognised that.

Mr. Michael Wills: Will the right hon. Gentleman give way?

Mr. Maude: No, I want to make progress, and this is a short debate.
The Institute of Directors survey revealed a fall in company optimism over the past quarter. Not a week goes by without another survey showing a downturn. The CBI industrial trends survey demonstrates that confidence is at its lowest level for 18 years. So whom has the Secretary of State for Trade and Industry been talking to? All that evidence matters because one cannot solve problems unless one recognises them, but it is different for the Chancellor and the Trade Secretary—they live in a problem-free world where any talk of problems is just


idiotic hysteria. Why does the Chancellor not talk to people who are doing business in difficult circumstances and find out whether they think that such talk is idiotic hysteria?
The Chancellor had the chance to put matters right but he has blown it. He is now simply playing the blame game, as the hon. Member for Gordon (Mr. Bruce) said yesterday. The Chancellor should not blame the world. Why, in the midst of all the problems around the world, is Britain doing worst? Why, in the economic downturn, is Britain in worst and in first? The Economist survey shows that Japan is the only industrialised country forecast to be weaker than Britain next year, and Japan is mired in a deep slump. The next weakest country after Britain is forecast to have twice Britain's rate of economic growth next year. If the downturn is due to global problems, why is Britain worst and first? That may have something to do with the Chancellor and his arrogant refusal to accept that there is a problem.

Ms Stuart: The right hon. Gentleman has spoken of arrogant refusal. What is his position on the Bank of England's independence? Would the Tories reverse that policy?

Mr. Maude: I realise that as the Chancellor has made such a mess of that, the hon. Lady is anxious for guidance on how to sort it out. The one absolute certainty is that the policy cannot be left as it is. It was a botched job; it breached an election commitment; it is not working; and it must be sorted out. We shall make our proposals in due course.

Mr. Tim Collins: Does my right hon. Friend agree that it is a little rich for a party that refused to tell the public its policy on the Bank of England three days before the previous general election to expect us to clarify our policy three years before the next election?

Mr. Maude: My hon. Friend makes the point well. We see the Chancellor smiling nervously because he knows that what he said before the election was sharply at odds with what he did. That is why the policy was botched and he got it wrong, and it cannot be left as it is.

Mr. Edward Davey: Will the right hon. Gentleman give way?

Mr. Maude: No, I want to make progress.
I return to why Britain is in first and worst. The Chancellor said blithely yesterday that every country has downgraded its forecasts because of world events. If one compares The Economist poll with what was forecast in June when the Chancellor published his fiscal and economic strategy, one finds that there have been downgrades—not universally, but in almost all industrialised countries—but no country in Europe has been downgraded as much as Britain. Not only is The Economist proposing a worse growth forecast for Britain next year than for anywhere else in Europe, but it has downgraded its forecast for Britain by more than for anywhere else.
Japan is the only industrialised country in the world that will have less growth than Britain—we know about Japan's problems—and the only other comparable country

is Australia, which also has a downgrade of 1 per cent. However, even that is a downgrade from 3.2 to 2.2 per cent., so the proportional downgrade is very much less than Britain's. There is a problem, and it is a problem for Britain, which will be first into the downturn and, as I said, will have the worst growth of any country except Japan.

Mr. Alan Johnson: You have said that three times before.

Mr. Maude: The hon. Gentleman should listen. Things have to be said three times if Labour Members are to understand. They are living in their own little fantasy world, with fantasy figures, adrift from the real world where there are problems that need to be solved.

Mr. Edward Davey: Will the right hon. Gentleman give way?

Mr. Maude: The hon. Gentleman made such a silly point earlier that I shall not give way to him.
We have said this before and we shall say it again: the Chancellor took over a golden economic legacy. There were the best prospects for a generation.

Yvette Coope: Will the right hon. Gentleman give way?

Mr. Maude: I have given way to the hon. Lady once; I shall make progress now.
The economy was showing growth faster than that of any other major European country. It had low inflation—the longest period of consistently low inflation seen in Britain for nearly 50 years—and we hit our inflation target. There is nothing very special about all the stuff that the Chancellor was saying yesterday about having brought inflation down; he has simply managed to get inflation back to where it was when he inherited it.
We had low unemployment—unemployment had been falling steadily. The Chancellor now takes credit for its continuing to fall for the first year and a bit after he took over. It is very nice of him to take the credit for it, but I honestly do not think that it was his doing. That was part of the economic legacy, and it has taken some time for the malign effects of his change of policies to come through—sadly for those people who, week by week, are losing their jobs.

Mr. John Bercow: rose—

Mr. Jonathan Sayeed: rose—

Mr. Bercow: Will my right hon. Friend give way?

Mr. Maude: If my hon. Friend will forgive me, I shall not give way. I shall make progress now.
We also saw record inward investment. What is happening today is very different. Business failures are up already. The Dun and Bradstreet survey shows that, after five years of falling business failures, the figures are rising. Jobs are being lost and factories closed; it is happening all the time. I have a very long list of job losses


and factory closures. Many of them are extremely familiar to the Chancellor; many of them are taking place in constituencies represented by Labour Members.
Labour Members know the truth. The Chancellor could not see it yesterday but, when he announced his growth forecast for next year of 1 to 1.5 per cent., we saw the looks of blank disbelief on the faces behind him. Labour Back Benchers did not believe him any more than did the commentators outside.
That is the reality—job losses, factory closures. What should the Chancellor be doing about it? Why did he commit the country to three years' public spending way above any conceivable growth in the economy? He is behaving exactly like the hedge funds that he was so keen to criticise earlier in the week—making long-term commitments against short-term revenues. He is being as irresponsible and reckless as they were.
As a result of that recklessness, Britain will bear the burden of higher borrowing—and, therefore, of higher interest rates than would otherwise have been needed.

Yvette Cooper: Will the right hon. Gentleman give way on that point?

Mr Maude: No; I shall not give way.
Why did the Chancellor attack savings as he did? I am sorry not to see the Paymaster General in his usual place; or perhaps he is in his usual place. How crass it was to let the Paymaster General loose on the savings culture that had been so carefully built up over the years, with his bungled plan to scrap PEPs. In March, the Red Book showed the savings ratio falling gradually over the Parliament, but already, such a short time later, the savings ratio is down by a quarter—at just the stage in the cycle when people should have been encouraged to save more, not less. The effect has been to push money into consumption, and to push interest rates higher than they need have been. Well done, Paymaster General: another outstanding contribution to British business.
Why did the Chancellor chase up business costs as he has? He knows, because his figures and the Red Book show it, that his business taxes and the Government's extra regulatory burdens will cost British business £40 billion a year. That is the cost of Labour: £1,500 for every person employed in this country.

Yvette Cooper: Will the right hon. Gentleman give way?

Mr. Maude: No, I shall continue; I am drawing to an end.
The Chancellor talked a great deal yesterday about productivity. Apparently, low productivity is now entirely the fault of British workers and British managers—it is all their fault. The Chancellor, the Trade Secretary and the Prime Minister wander round the countryside lecturing British business men and workers on how they must work harder and do better, and on how low productivity is all their fault and nothing to do with the Government. However, the Chancellor should listen to some comments made by business people who have invested in Britain in recent years.
In October 1995, three years ago, the president of Philips said:
The most competitive country in Europe today is the UK.
It has a great sense of realism, a great sense of competitive spirit—the factories we have in the UK are the most changed factories in the world.
For manufacturing, Britain is the most competitive country in Europe today.
What has changed? Has the work force changed? Has the management changed? Has the country changed? No, only one thing has changed—the Government.
In October 1995, BMW—which owns Rover, and was memorably told last week by the Trade Secretary to sharpen up its act—stated:
Great Britain is currently the most attractive country among all European locations for producing cars.
This results from the structural reforms initiated by Margaret Thatcher in the early 1980s
What has changed? Why is BMW now closing plants, laying people off and reducing capacity? What has changed since 1995?
The Prime Minister may remember that Siemens opened a plant in his constituency. In August 1996, Siemens stated:
Our decision to build the new semiconductor plant here in the UK is a recognition of the pro-business environment which exists and the skills and commitment of the British workforce"—

Several hon. Members: rose—

Mr. Maude: I shall not give way.
The chief executive of Siemens went on:
But let me make one point clear here, and that is that we have not invested here because we see the UK as a low-wage economy. On the contrary.
The Government have concerns about productivity? Those great multinational companies chose to come to Britain because Britain was a good place to do business. Why are those companies now closing their plants and laying people off? What has changed, besides the Government? Nothing.

The Chief Secretary to the Treasury (Mr. Stephen Byers): Will the right hon. Gentleman give way?

Mr.Maude: No,I shall not give way; I am finishing my speech.
It was 10 Downing street, not the Opposition that ascribed psychological flaws to the Chancellor. Although I would not go along with that ascription—I would go along with economically flawed, for sure—I encourage the Chancellor to keep open somewhere in the dark recesses of his mind a tiny place where he acknowledges even the merest possibility that he may be wrong. He knows that the price of his mistakes will be measured in lost jobs and business failures. If that happens because of his arrogant complacency, he will never be forgiven.

The Chancellor of the Exchequer (Mr. Gordon Brown): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof;
notes that the Government inherited an economy set to repeat the same cycle of boom and bust seen over the past 20 years, that inflation was heading way above target because of the previous Government's failure to accept the Bank of England's advice and the public finances were in large structural deficit; recalls that under the previous Government inflation rose to 10 per cent. interest rates remained in double figures for four years and one million manufacturing jobs were lost, while net borrowing increased to £50 billion and the national debt doubled in just four years; notes that the previous Government's policies increased inequality and failed to tackle the structural weaknesses in the economy; commends this Government for its decisive action to build a stable economy, introducing a new framework for monetary policy under which inflation is now at target and set to remain there and interest rates are less than half their previous peak, reducing government borrowing by £20 billion last year and, because of prudent management of the public finances, remaining on track to meet its tough fiscal rules and invest an additional £40 billion in education and health, with an extra £250 million for the National Health Service this year, addressing structural weaknesses by tackling unemployment and poverty with the New Deals and tax and benefit reform, supporting British business by cutting corporation tax, doubling public investment to improve Britain's infrastructure and addressing Britain's productivity gap; and notes that there are now 400,000 more people in employment than at the General Election and that Britain is better placed to steer a course of stability in an uncertain and unstable world.
I am grateful to the Opposition for today's debate, which gives us an opportunity to explain why independence of the Bank of England is the right policy for Britain; why international financial reform is necessary to deal with the world situation; why the welfare-to-work programme introduced by the Government and the working families tax credit—which Conservative Members would abolish—are the right policies for Britain; why there is a productivity gap that even the previous Government recognised had to be dealt with, even if the shadow Chancellor will not admit it; and why good, efficient public services, in which we will invest £40 billion over the next three years, are right, and the best thing for Britain's future.
I do not think that the House or the country will take lectures from the former Financial Secretary to the Treasury, who glossed over the fact that, between 1990 and 1992, when he was Financial Secretary, interest rates were without exception above 10 per cent. During that time, interest rates went up to 15 per cent., the public sector deficit was rising to £50 billion, unemployment was rising by a million, manufacturing output was falling by 7 per cent., manufacturing investment was falling by 15 per cent. and inflation rose to nearly 10 per cent. That is why the country will take no lessons from the Conservative party on how to run the economy.

Mr. William Cash: Does not the Chancellor accept that the real reason for the catalogue that he has just set out is that we mistakenly stayed in the exchange rate mechanism for far too long? Furthermore, are not the policies that he is pursuing, including the granting of independence to the Bank of England, in pursuit of a policy that means that we will no longer have control over our economy? Both he and the Secretary of State for Trade and Industry clearly committed themselves to that policy at the recent CBI conference. Does he accept that,

by throwing away our ability to control our own affairs, he will condemn this country and those who work in it to massive continuing unemployment?

Mr. Brown: I know that the hon. Gentleman seeks every opportunity to bring the European debate to the Floor of the House, and I was grateful for his support during the general election campaign by raising those issues, but the mistakes made in the late 1980s were to allow inflation to get out of control, to allow wages to rise uncontrollably—to 11 per cent. in 1990—and to have interest rates at over 10 per cent. for four years.
The hon. Gentleman asks about the Bank of England and monetary policy. By making the Bank of England independent, we have set in place a long-term monetary framework for this country. It is the first building block of an economic strategy for the future. The shadow Chancellor says that that must all be changed. In other words, his policy is to scrap independence of the Bank of England—

Mr. Maude: indicated dissent.

Mr. Brown: The right hon. Gentleman shakes his head. Is that his policy or not?

Mr. Maude: As the Chancellor has made such a mess of it, it cannot be left as it is. If he could not tell the country what his policy was three days before the election, we shall not outline our final policy three years in advance. However, one thing that is for certain is that, because he has botched and bungled independence of the Bank of England, it cannot be left as it is. Most people agree with that.

Mr. Brown: The Opposition say that they have the answers to the problems of the economy, but they cannot answer the first fundamental question about monetary policy. I take it that the right hon. Gentleman would not leave the Bank of England in control of interest rates. He says that it must be changed. He is at odds not only with the rest of the country and the Labour party, but with many sensible Conservative Members, who know that it is the right course of action for the country.

Mr. Kenneth Clarke: rose—

Mr. Brown: I shall give way to someone who supports a central bank, even if it is an independent central bank in Europe.

Mr. Clarke: I did not seek to intervene on that point. However, I happen to believe in the liberty of Back Benchers to be attracted by the independence of the Bank of England. I know of no independent central bank whose membership comprises full-time officials of the Bank of England plus academic economists who are friends of the Chancellor and his advisers, nor a central bank that has made such mistakes as unnecessarily to raise our interest rates to the highest level in the developed world to avoid an inflationary boom that was never a danger.
In reply to my hon. Friend the Member for Stone (Mr. Cash), the Chancellor talked as though he took over the economy in 1988 rather than 1997. He draws comparisons with the boom and bust of the late 1980s,


not with what he actually inherited. The last peak in interest rates was, if my memory serves me right, at 6.5 per cent., when we achieved a soft landing in 1996. We then resumed steady growth and falling unemployment, for which the right hon. Gentleman has just taken credit. We hit an inflation target of 2.5 per cent., which he and his botched-up independent bank have wrecked.

Mr. Brown: That was an amazing intervention by the former Chancellor. He wants to forget the 1980s and the fact that he was Secretary of State for Trade and Industry and for Employment, and held many other Government offices, just as the shadow Chancellor wants to forget that he was Financial Secretary to the Treasury between 1990 and 1992. They cannot escape their record: interest rates at 15 per cent., and they were above 10 percent. for four years. The answer to that is to have a credible long-term framework for monetary policy. I am glad that he now agrees that there is an attraction in the independence of the Bank of England.
Perhaps now Conservative Members can resolve this problem among themselves. The former Chancellor supports the idea of independence; the shadow Chancellor opposes it. Perhaps they should have a referendum of their party members to resolve the problem.

Sir Peter Tapsell: As the right hon. Gentleman knows, I have made several speeches in the previous Parliament and in the present one explaining why I wholly oppose an independent central bank, but I speak for myself. Assuming that the Bank remains independent, may I put this important point to him—a technical point that he should consider?
It will not have escaped the right hon. Gentleman's attention that the new Finance Minister of Germany, Mr. Lafontaine—presumably he has a good deal of political sympathy with him—has been telling the European central bank that he is extremely unhappy that it is limited by the Maastricht treaty to having purely an inflation target. As he has made clear publicly, he wants those criteria changed to include growth and employment.
If we had to go on with an independent central bank, which I hope we will not, can we not move at least to change its criteria, so that it has to take account of growth and employment, and becomes much more like the Federal Reserve bank in the United States, which does not operate with such narrow criteria and instructions?

Mr. Brown: I am grateful to the hon. Gentleman for entering the debate about the independence of the Bank of England. The Conservative party now seems to be as divided on that as it is on Europe. The former Chancellor is attracted to it, the shadow Chancellor is clearly against it, and now a Back Bencher says that he has to speak in a personal capacity because he does not know what the policy is.

Sir Michael Spicer: rose—

Mr. Kenneth Clarke: rose—

Mr. Bercow: rose—

Mr. Brown: I must take the intervention of the hon. Member for West Worcestershire (Sir M. Spicer). Perhaps he can tell us what the policy is on the independence of the Bank of England.

Sir Michael Spicer: I was wondering what the Chancellor's policy was. He has made a virtue of

the independence of the Bank of England, yet it seems that he is one of those who have been outed as hellbent on handing over its powers to the central bank of Europe and on abolishing all its independence. How does he square those two things?

Mr. Brown: We have set the five economic tests for membership of the single currency. On the future of the Bank of England, the reason why I support independence and believe that the Conservative party, on reflection, will believe that it is against the national interest to scrap the independence of the Bank, is because, for 30 or 40 years, this country has lacked the long-term monetary framework that is necessary for stability—long-term objectives that are set down clearly, free of party politics and short-term pressures, rules that the Bank and the system have to follow, and transparency in the reporting of decisions.
One reason why long-term interest rates fell from 7 per cent. and why the differential with Germany, which has been a low-inflation country, has narrowed on long-term interest rates is precisely because we made the Bank of England independent.

Mr. Malcolm Bruce: rose—

Mr. Brown: Of course the Liberal Democrat party supports us in that, although not in everything else. I do not believe that any sensible political party will veer from that position.

Mr. Bruce: Will the right hon. Gentleman acknowledge the curious position of the Conservative party on this issue? The only major country in the G7— indeed, in the western world—that still does not have an independent central bank is Japan, which the shadow Chancellor has been pointing out is locked in a serious slump, and is hardly an ideal role model for having a bank that is under political control.
Nevertheless, will the Chancellor acknowledge that the shortness of the appointments to membership of the Monetary Policy Committee has been a genuine issue? Will he accept that it would be much preferable if those appointments were extended beyond the life of a Parliament, so that independence would not only be granted, but go beyond the life of any single Government?

Mr. Brown: I am happy to enter a debate about the future arrangements for the Bank of England. I believe that the arrangements that we have set down, with a five-year appointment for the Governor and up to four years for membership of the Monetary Policy Committee, are right. We are hearing sensible questions about the way forward from the Liberals. We have not heard what the Conservatives would do. Would they scrap the independence of the Bank of England? If they cannot answer that question soon, nothing in their economic policy has any credibility. The shadow Chancellor—

Mr. Maude: rose—

Mr. Brown: Ah, the shadow Chancellor is going to answer the question now. I am very grateful to him.

Mr. Maude: I am getting fed up with the Chancellor of the Exchequer, who would not even answer the


question on polling day, yet is pressing for an answer from us three years before the election. There was nothing about the issue in Labour's manifesto, and nothing was said to the electorate before the election, yet he criticises us three years before the election for not producing a final answer.

Mr. Brown: The right hon. Gentleman is getting very excited—and more and more red—but he does not seem able to answer the one question that the House is waiting for him to answer: would he scrap the independence of the Bank of England? The Conservatives cannot have a credible economic policy unless they can tell us their position on monetary policy and the independence of the Bank of England.

Mr. Kenneth Clarke: Will the right hon. Gentleman give way?

Mr. Brown: I shall give way after I have made some progress, because there are five issues to be addressed.
The first is on monetary policy. We have set out a clear policy. Long-term interest rates have come down. Because of our policies and the early action that was taken against inflation, it was possible for the Monetary Policy Committee of the Bank of England to respond to the international economic conditions as it did last month, bringing interest rates down from 7½per cent. to 7¼per cent. That is a big contrast with the 15 per cent. interest rates at the beginning of the 1990s.
The second issue is that we should play our part in rebuilding and making changes in the international financial system. That is why we have proposed a global financial regulator. Our proposals have been accepted by many countries. We have also taken action on a fund that will be available to help countries in difficulty. We are insisting on transparency in the future workings of the private and public sector. Those are sensible proposals that G7 countries have agreed to.
I said when the former Chancellor was not here on Monday that he had contributed to developing proposals for the international financial architecture. The problem is that those on the Conservative Front Bench cannot tell us the party's position on those issues. The Conservatives seem to be opting out of the world as well as opting out of Europe. A sensible economic policy for this country requires answers on how to reform and strengthen the international financial system.
The third issue of economic policy is international and national economic stability, which must be backed up by a policy for welfare to work in this country. That is why we have taken the action that we have. Some 300,000 people will benefit from the new deal by next Easter. Almost 30,000 companies have agreed to take people on. About 150,000 young people are part of the new deal, and 90,000 long-term unemployed men and women will be offered opportunities in 26 areas from the end of November.
Disabled men and women are being invited to join, backed up by a disabled persons tax credit. Lone parents are being given the chance to get advice, information, help and child care to enable them to get the chances that they want. Almost every household name company in the country supports the programme, and I am grateful to them.
I invited individual Members of Parliament from the Opposition parties to be ambassadors for the programme. We sent them details of how it would work, so that they could play a part in their constituencies. However, six months into the new deal, the shadow Chancellor said yesterday that it was a failure, and today that it is a fraud. I do not think that it is either a failure or a fraud. I think that, on reflection, the Opposition will change their mind about that policy as well.
The Opposition opposed the windfall tax, which made the welfare-to-work programme possible, yet one of their own Members, the hon. Member for South-West Bedfordshire (Sir D. Madel)—I do not know whether he is present—was reported in his local newspaper as saying:
When we are returned to power, we will build on this scheme, which is doing a lot to help people.
Do not other Conservative Members agree that the new deal is doing much for young people? It is about time that the Conservatives recognised that that policy, too, is right for the country.
The Conservative party is opposing the working families tax credit—a measure which is similar to the earned income tax credit that was expanded by Ronald Reagan in America. The programme enjoys all-party support—from Republicans to Democrats—in the United States. The Conservative party wants to prevent work paying more than benefits as a result of the introduction of the working families tax credit, which improves family credit. Why do Conservatives refuse to extend to 1.5 million people, as we want to do, the benefits that they, under family credit, made available to 800,000 people? What dogma has taken over the Conservative party to the extent that it does not want to reduce the marginal rate of tax for low-paid workers?

Mr. Nick Gibb: indicated dissent.

Mr. Brown: The hon. Gentleman, a Front-Bench spokesman, says that the Conservatives will definitely abolish the working families tax credit. I am sure that my hon. Friends will agree that this has been a very revealing debate. The Conservatives would abolish the working families tax credit; an Opposition Front-Bench spokesman is prepared to say it.

Mr. Gibb: indicated dissent.

Mr. Brown: If the Conservative party stands on that policy, 1.5 million low-paid workers will face a major wage cut as a result. It will have to answer to the British electorate for that.

Mr. Kenneth Clarke: May I remind the Chancellor that he inherited the welfare-to-work policy? We argued that the working families tax credit would simply replace our system of family credit, and we rejected it because the American experience is that it is more expensive, less effective and more open to abuse. The only reason why the Chancellor adopted it was to fiddle public spending figures—to pretend that money spent on it was not public expenditure any more—in order to keep down the anticipated growth of public expenditure over the next three years to a mere 2.75 per cent. in real terms per annum.

Mr. Brown: History books will show that the original proposal for family credit in the 1980s was very similar


to the working families tax credit. It was rejected due to opposition in the Conservative party. That was not right for the country.
As people see the benefits not of just family credit but of a guaranteed minimum income of £190 a week, which is available to those who have families and who take up the opportunity to work, they will realise that the working families tax credit is a far superior system. Even the right hon. and learned Gentleman, a former Chancellor, who has changed his mind on issues such as the Bank of England, will change his mind on this policy. Our policy of building on stability is a new deal for young people and the long-term unemployed, backed by a minimum guarantee of money for families in work, so that work pays for everyone who is able to do it.
I think that, on reflection, the Conservative party will change its policy on the minimum wage, too. A minimum wage, which was acceptable to Sir Winston Churchill and is applied in America and all countries that have a higher standard of living than ours, is a minimum necessary not simply for economic efficiency but for social justice. On that issue, the Conservative party has much thinking to do. I look forward to hearing the results of it.
The next building block in our economic policy is what we will do about productivity—[Interruption.] We mention productivity and the Conservatives start to laugh, as if they do not recognise it as a problem. I can tell them who first wrote about productivity as a problem in the 1990s. It was the former Deputy Prime Minister, the right hon. Member for Henley (Mr. Heseltine), who, year after year, published competitiveness White Papers saying that our productivity had to improve. [HON. MEMBERS: "It did."] Does the shadow Chancellor say that there is no productivity gap with any of our competitors?

Mr. Maude: rose—

Mr. Brown: He may be able to correct us now.

Mr. Maude: What I will say is that, as a result of what we did, productivity did improve. It is since the election that it has started to fall. Why did Siemens, Philips and BMW praise Britain to the skies as a place to do business then, whereas they are now withdrawing?

Mr. Brown: The revealing aspect of the shadow Chancellor's answer is the fact that he started it with the words, "What I will say is that—". In other words, he cannot deny that there is a productivity gap with our competitors. It is a sad reflection on 18 years of Conservative government that we have a gap of 20 per cent. with some of our European competitors and 40 per cent. with some of our American competitors.
British business and the Government, unlike the Conservative party, are prepared to examine those issues, to discuss them seriously and to consider practical things that can be done. We have been prepared to consider the venture capital industry, for example, and what we can do about employee shareholding and how to encourage science and innovation. The shadow Chancellor may not want to comment on any of those announcements, but they represent significant advances for science and

innovation, and for small businesses in this country. We have cut small business taxation and given advances for training and skills—

Mr. Bercow: rose—

Mr. Brown: I shall not give way at this stage—[HON. MEMBERS: "Oh."] All right, I will.

Mr. Bercow: I thank the Chancellor for rethinking his decision; let us hope that it presages a rethink on all sorts of other issues on which he has cocked up in massive style—

Hon. Members: Wash your mouth out.

Mr. Deputy Speaker(Sir Alan Haselhurst): Order. The hon. Gentleman might like to withdraw that remark and rephrase it.

Mr. Bercow: I withdraw that ill-advised term,Mr. Deputy Speaker.
In his foreword to Labour's business manifesto of April 1997, the Chancellor wrote:
We will not impose burdensome regulations upon business because we understand that successful businesses must keep costs down".
How does he square that ringing declaration with the reality of an additional £1,500 per person tax and regulatory burden in the lifetime of this Parliament? Is that not a contradiction, and will he not apologise?

Mr. Brown: We have cut corporation tax— [Interruption.] Now the Conservatives want to deny that we have cut corporation tax. This is a revealing debate. We cut corporation tax—[Interruption.] They are getting angry. We cut corporation tax from 33p to 30p, and small business taxation from 23p to 20p. We have introduced a long-term capital gains tax rate of 10p in the pound. All those measures have been welcomed by business. It is a pity that business and the Conservative party are so much at odds these days that the Conservative party cannot also welcome them.
I have raised the issues of monetary policy, stability and the international financial system and how we shall improve it. I have also challenged the Conservative party on welfare to work, and Conservative Members do not seem to be able to give answers. Productivity, which they seem to regard as a joke, is serious to every business; it is something on which business wants to work with us.
Let us deal with the final building block of our policy— the fact that the country needs and deserves good and efficient public services. I thought that the shadow Chancellor would welcome the fact that we had a surplus of £5.5 billion on the current account this year, the fact that we have kept under our spending ceilings, which he and his party said we would never be able to do, and the fact that a net borrowing requirement, prudently estimated in March, has turned into a surplus and allowed us to repay debt.
I thought the right hon. Gentleman would have welcomed the fact that the public finances have eliminated the current structural deficit as a result of the work that has been done. Instead, he is unprepared to recognise that


we were left with a £28 billion deficit, and that the Labour Government have been prudent, sensible and cautious with public finances in a way that his party was not.

Mr. John Townend: rose—

Mr. Andrew Lansley: rose—

Mr. Brown: I shall not give way; I am explaining to the Conservative party what has happened to the public finances.
Conservative Members' answer on every issue is that they would cut public spending. Their answer to the question about what they would do about the economy is that there should be a moratorium on our public spending commitments. They started off by saying that public spending was unwise; then they said that they would not carry it out themselves; then they said that it was reckless; and then the shadow Chancellor, who needed a further comment to get attention, said that our public spending programmes were madness.
This afternoon, we have heard the shadow Chancellor say that he does not want to cut into health and education, but the only way that he could make the savings for reckless, extreme—as he calls them—spending programmes would be to cut into the £40 billion for health and education. That is the majority of the additional spending that we are undertaking; that £40 billion is absolutely central to the increase in public spending.
If the shadow Chancellor is telling us that he would not put health and education at risk, he must tell us which other billions he would cut, and in which areas. The Conservative defence and law and order spokesmen say that they would spend more. In which area would he achieve those billions of pounds of public spending cuts? Again, the public deserve a proper answer.

Mr. Maude: As he so often does, the Chancellor has said something that is plumb wrong. He said that the health and education spending increases are the majority of the public spending increases. The total, under the Government's funny accounting, is £110 billion over the next three years, of which health and education is no more than £40 billion. Nearly as much as both of those put together is social security spending, which the Chancellor and the Prime Minister promised to cut.

Mr. Brown: Let us be clear about this. The Conservatives entered the election campaign saying that they would maintain the basic state pension, and raise it in line with inflation. I assume that that is still their commitment. [Interruption.] No? Well, the debate gets more and more interesting, and is quite a revelation. The shadow Chancellor cannot give us a simple answer. Would he maintain the level of the basic state pension in line with inflation? If he cannot give that answer, he is breaching—[Interruption.] It has taken the shadow Chancellor some time to come to this point. Let us hope that we get a direct answer.

Mr. Maude: The country will be disgusted by a Chancellor behaving in such a way. He is responsible for the downturn starting in this country, and all he can do is

make cheap debating points. He should grow up, stop being an adolescent. student politician, and take his job seriously.

Mr. Brown: The whole House, including Conservative Members, will note that the shadow Chancellor did not answer that question. He cannot give us an assurance, even though it was in the Conservative manifesto, that he would raise the basic state pension in line with inflation. This has been a very revealing debate.

Mr. Owen Paterson: rose—

Mr. Lansley: rose—

Mr. Brown: I do not think that two Back Benchers can rescue a shadow Chancellor in this difficulty, no matter how hard they try.
If the shadow Chancellor will not answer the question, every pensioner in the country should know that the Labour Government are raising the pension in line with inflation and have provided winter fuel payments, but the Conservative party will not guarantee that it would do that if it was in government.
We know now that there would be cuts in public spending if the Conservatives were ever in government. We know that health and education would be at risk, but there has been a £40 billion increase, which we will stand by. We know also that the pension is not something which the shadow Chancellor will guarantee. The Conservative party initiated the debate, and Conservative Members wanted to ask questions of us. The Conservative party must now answer all the questions. This Government are maintaining economic stability. We are improving public services. We will work with business to increase productivity. Unlike the Conservative party, we will be fair to every citizen, and that is why the House should support our amendment.

Mr. Malcolm Bruce: I was confused by the direction of the Conservative attack. I have come to the conclusion that the only matter about which the Conservatives are sure is that they want the country to go into recession as that is their only hope of making some political gain. Although there are differences between the Liberal Democrats and the Government, we agree that we want the country to succeed. Our debate is about the policies that will ensure that success and the revenues that will underpin the public services in which we want to invest.
The Conservatives talk about fantasy forecasts, but we have had many opportunities to debate their forecasts and the substantial revisions that they had to undergo when the outturn did not fulfil the early promise. What is the Conservative policy on inflation these days? The Chancellor pressed the Opposition for clarification on several occasions on the subject of the Bank of England without receiving any coherent answer. The rhetoric appears to be that it was wrong to give the Bank of England independence and that it should be taken back


under political control, which should then be used to reduce interest rates regardless of the implications for inflation.

Mr. Maude: That is what the Liberal Democrats say that they would do.

Mr. Bruce: It is not and the right hon. Gentleman will hear why. The reality is that Japan is the only country in the Group of Seven with a nationalised bank and, as a consequence, there has been a cosy arrangement between the politicians and the private sector, which has brought the country to its knees—hardly a model that we want to emulate. The reality is that markets recognise that independent banks take the short-term political interference out of decisions to control monetary policy. The Chancellor is right to say that that yields the benefit of lower interest rates in the long term.
The issue that dare not speak its name is how we learn to live with the euro. The Conservative party thinks that it has resolved the issue by simply saying, "We want nothing to do with the euro for eight years." That is completely at odds with the traditional pragmatism of the Conservative party when it had aspirations to government. No one knows what will be the responsible decision in eight years' time and the meaning behind much of what the Conservatives are saying appears to be, "Under no circumstances will we ever join."

Mr. Cash: rose—

Mr. Bruce: The hon. Gentleman should contain himself. Given that the euro will be established by 11 countries on 1 January, we will have to do business with that market and live with it. How will we compete if our interest rates continue to be double the European average? The Conservatives have nothing to say about that. They have no strategy or game plan as to how we should live with the euro. They want political control of the Bank of England so that they can manipulate interest rates regardless of the effect on inflation. They want the freedom to have interest rates double those of the rest of Europe. If that is an economic policy, I want no part of it.

Mr. Cash: Does the hon. Gentleman accept that, in practice, he is saying that the Liberal Democrats are prepared to tell their constituents that they will no longer have any real control—through the ballot box—over interest rates and inflation and, therefore, employment? Does he accept that it is ultimately a political decision and that the Liberal Democrats, in common with the Government and some others, are prepared to sell this country down the river?

Mr. Bruce: The hon. Gentleman should stop deceiving his constituents that he, let alone the Government—perhaps even more than the Government—has the power over such issues that he implies by his questioning.
We live in a global market—that is reality, not an opinion—and markets must be taken into account. Interest rates across Europe are at least 3 per cent. lower than those in the United Kingdom. It is unrealistic to expect us to compete with no strategy to close that gap.
The hon. Gentleman is naive if he thinks that the rate set by the European central bank—whether we are in or out of the euro—will have no effect on the decisions that this country takes, regardless of whether the Bank of England is under political control.

Mr. Bercow: The hon. Gentleman seems badly confused. In an interdependent economy, of course Sainsbury's must take account of the prices that are set by Tesco. Does he seriously believe—as he seems to, on the logic that he used in response to my hon. Friend the Member for Stone (Mr. Cash)—that the chairman of Sainsbury's would give up to the chairman of Tesco the right to set prices at Sainsbury's?

Mr. Bruce: That is a classic example of treating the economy of a family or a business as if it were the economy of a nation. We operate in a market, and we must take account of trends in that market.
The Government will have to decide on a strategy to deal with the situation in which we find ourselves. The downturn in the economy—which the Chancellor acknowledged yesterday, although he did not dwell on today—has been caused much more by the management of domestic policy than by international factors. In his reply to my question yesterday, he cited the $3 trillion fall in the world stock markets, but that figure takes account only of what happened between July and September. Over the year, the stock markets have not fallen at all—they are still, on the whole, at record high levels. For the vast majority of citizens, what has happened in the stock markets is not a factor that will fundamentally alter individual decisions.
In the pre-Budget report, the Chancellor compares our growth forecast with the weighted average of the G7 figures, which include the figures for Japan. If Japan is taken out of the equation, the downward thrust of British growth is, as the shadow Chancellor said, sharper than that of any of our major partners. The Chancellor has not acknowledged that fact; he certainly has not admitted that it has anything to do with his policies.
Liberal Democrats support the independence of the Bank of England. We believe that it is unwise for Ministers inadvertently or deliberately to lean on the Bank, as that could be counterproductive. As Trichet warned yesterday, the greater the pressure from politicians, the more likely independent bankers are to resist it—bankers must be allowed to make objective decisions.
That does not mean that the Chancellor can say, "It's nothing to do with me, guv." His fiscal and spending policies provide the framework within which the Bank operates, and that is where he has failed to strike the right balance. Because he has not pursued the strategies that would have enabled the Bank to reduce interest rates, which has created the disparity whereby our exchange rate has continued to be uncompetitively high, there has been a recession in manufacturing—he admits at least the risk of such a recession next year.
If the downward revision of our growth forecast and productivity is more to do with domestic economic management than world activity, which the Chancellor chooses to blame, his failure to make any changes will


mean that his figures are over-optimistic and the Government's ability to sustain investment in public services may be undermined, which neither he nor I want.

Sir Michael Spicer: The hon. Gentleman makes a good point about the fact that the Government's fiscal policy does not match their monetary policy. However, should he not address that point to the Liberal Democrats? His party is the most profligate of all in pressing for more public spending, so how does he square that circle?

Mr. Bruce: I understand where the hon. Gentleman is coming from but, like so many hon. Members, we do not read one another's policy documents in detail. To have a proper fiscal policy, if one makes a commitment to invest in health and education, one shows how one will raise the money to pay for it. The Conservative Government did not do that. The irony is that they told us that they would cut spending and then boasted about the increases that they delivered; they told us that they would cut taxes, and they increased them. One does not get something for nothing. If one wants to make an investment in public services, one has to raise taxes.

Mr. Christopher Leslie: Will the hon. Gentleman give way?

Mr. Bruce: No, I will not, because I think that our position is clear and I want to discuss the Government's pre-Budget report.
We welcome the innovation of the report and the principle that it establishes, allowing better consideration before tax changes. As one who participated in the process last year, I know that the consultation was genuine and led to improvements in the quality of the changes that were introduced or, indeed, not introduced.
I hope that the Government will reconsider some of the tax wheezes that they seem to favour to provide incentives for various types of behaviour. We are in favour of simplifying the tax system and removing anomalies and will support the Government when they endeavour to do that, but well-meaning tax breaks often end up as wasteful tax loopholes that are quickly abused. The Chancellor, in opposition, was a master of exposing tax loopholes, so I hope that he will not create too many in government.
In evidence to the Treasury Select Committee, Andrew Dilnot said:
Thinking back over the last 20 years, I can think of no tax scheme which has been particularly successful in its original objectives… any attempts to use the tax system to encourage a particular activity will generate all of the foreseeable problems we can imagine, a number we had not foreseen, and in general rather less of the good than we had hoped for.
Those are reasonably wise words. The Government's proposals on individual savings accounts and capital gains tax are already causing problems, to which we will return on the Finance Bill.
It is easier to identify problems with productivity than to come up with practical solutions. There is an argument about how much of a productivity gap there is and how much it has improved in recent times. We will support measures that genuinely improve productivity, but most of those should come from the companies and businesses themselves, not from the Government. The problem has not arisen suddenly, and it is certainly not the cause of our current reduction in growth forecast.
The weakest chapter in the pre-Budget report is the section on productivity, which contains an awful lot of waffle. I think that we would all agree that it is desirable to
keep to a minimum the number of unnecessary corporate failures",
as we are told on page 37, but does that really need to be written in a Government report?
We welcome the extra money for the health service, but would it not be better to be realistic about funding in the first place? I know that the Chancellor likes to have a lollipop to pull out of the hat in his pre-Budget report, but is it sensible to throw £250 million at the national health service in the last five months of the financial year rather than providing it in a planned way over the course of the year?
We welcome the commitment to new measures to reduce pollution and the work that the Government are doing on tax to reduce carbon emissions from businesses, but am I right in thinking that the Chancellor's welcome for Lord Marshall's report was less than overwhelming? He promised to look at the matter very carefully and said that the report "moves forward the debate". Thank you, Lord Marshall, and goodbye? Will the energy tax join pensions reform, monetary union and other matters in being kicked into touch? As one political commentator said yesterday, it will soon be standing room only in the long grass.
The central issue in the pre-Budget report was the outlook for growth, employment and borrowing. The Chancellor has forecast a modest and short-lived downturn, but the question being asked in the House and outside is whether that is wise. Unlike the Tories, the Liberal Democrats do not pray for a recession before going to bed each night. We understand that recessions tend to occur when economic policy cannot respond to deflationary forces—for example, if there is an inflation problem or a profound currency problem—but we do not currently have such problems in the United Kingdom. The Liberal Democrats, therefore, agree that the best guess is a slowdown and not a collapse in growth, and we hope that that is the outcome.
I am surprised that the Chancellor has chosen to be quite so relaxed about our prospects. He has even revised the growth figures for 2001. I wonder whether he could not resist the chance to stick the shadow Chancellor's black hole down his throat. I accept that that prospect was inviting, but I am not sure that a 3 per cent. central prediction for growth for 2001 is prudent. It would be above trend if it were delivered. If that figure is too optimistic, the Chancellor may find that his borrowing forecasts are a little optimistic.
We agree that the Chancellor has given latitude on the golden rule and he has a margin for error built into the calculations, but we are concerned by his estimates for manufacturing output. Many people working in farming and manufacturing industries will have listened in vain for some words of encouragement from the Chancellor. He forecasts 0 per cent. growth next year as a central tendency, so even he acknowledges that we could face a recession. The private sector consensus is closer to minus 0.5 per cent. and some commentators have gone as low as minus 3.5 per cent. The CBI survey, the results of which are the worst since 1980, estimates that manufacturing is likely to be in recession next year and that, over the two years, job losses could exceed 400,000.
The Government have not addressed that crisis. The Chancellor's manufacturing forecasts look like proving both complacent and wrong.
The situation may be even worse. No Chancellor wants to forecast a recession in any sector of the economy, but the danger is that, in masking his concern, he has produced a policy complacency that puts jobs at risk. I made that argument last week and I shall not repeat it, but I remind the Chancellor that lately the pound has been higher than it was in the 1990 recession and real short-term interest rates have been higher than in the 1980 recession. If those problems are not addressed, we face a continual haemorrhage of jobs from the manufacturing sector. In his July Budget last year, the Chancellor diagnosed that problem, but he has failed to deliver his own prescribed cure for rebalancing the economy.
Yesterday, the Chancellor failed to give the Bank of England a clear message. If he had said that he will not ease fiscal policy in March and, in the present climate, that he will not go ahead with his 10p tax rate, that would have enabled the Bank to bring down interest rates sharply. The Chancellor must surely acknowledge that interest rate cuts—and not tax cuts—must now be the priority. It is unnecessary to dangle in front of us tax cuts that he cannot deliver at the risk of failing to give the Bank of England the scope to the deliver the rate cuts that are desperately needed. If his complacency causes the Chancellor to ignore that need, interest rates may not come down sufficiently fast. I worry that the Chancellor's reading of the situation is that we have passed the worst and that the Bank of England is so depressed by the situation that it will reduce interest rates as a consequence of its negative outlook. The Bank has certainly not received any policy guide from the Chancellor. Without a shift in policy, thousands—even hundreds of thousands—of manufacturing jobs will be lost.
I hope that the Chancellor's optimism is borne out. He is in charge of the economy and we all hope that he is right. I hope that he understands that the issue is neither the global economy nor the productivity gap. He has a responsibility to share with the Bank of England the policy that will deliver what all of us need. That policy is lower interest rates and a competitive exchange rate that can ensure a slowdown, followed by sustainable growth and the ability to fund quality public services.

Mr. Christopher Leslie: I am glad to follow the hon. Member for Gordon (Mr. Bruce) as it was interesting to hear him say that it is wrong to dangle major tax cuts before the public. I know that he has advised people not to read the policy documents of other parties, but I have read closely his pronouncements in "Moving Ahead", the financial policy he set out at his party conference. His proposals included changing personal income tax allowance from £4,195 to £10,000, which would cost the Exchequer £29 billion.
I do not like to quote the hon. Gentleman's words back at him, but those proposals hit me in the face when he said that when we make a commitment, we have to take responsibility for saying where the money is coming from. As long as we establish that the Liberal Democrats are beginning to say where the money is coming from, that is

the important thing. They have said that they want to cut what they regard as ill-judged tax reliefs and to impose a significant energy tax, although the details are unclear.
To raise £29 billion would mean astronomical changes in the tax system. That amount is nearly half the total income tax take, and it is more than the combined amount we spend on law and order, trade and industry and defence. We must find out how the Liberals would raise the money. They talk of ill-judged tax relief, but scrapping tax relief on occupational pension schemes would raise only £9 billion. It would be interesting to know whether they would do that, and I would be happy to give way to the hon. Member for Gordon if he wants to clarify the point.
Does the hon. Gentleman want to scrap tax relief on redundancy payments? That would raise only £1.1 billion. If the hon. Gentleman were to try to raise the whole £29 billion by adding to the price of petrol, he would have to triple its price. I urge him to take his own advice: when he makes a commitment, he must take responsibility for saying where the money will come from. I shall happily give way to him if he wants to specify how he wants to pay for that. Will he? No answer. I need not dwell on the Liberals, who are obviously not interested in their own policies.
Let me focus instead on what is left of the rabble that is the official Opposition. Not many of them are here, and I am sorry that the shadow Chancellor has gone because I had many questions for him. He came out with so much concern for employment that I wondered whether he was considering resigning his directorships at Asda and at Gartmore Shared Equity Trust to let someone else have a go at those extra jobs. Perhaps employment does not figure so personally in his interests.
The Conservatives persist in talking down the economy. They constantly pick away, trying to find any loophole that will gain them some political advantage. They point out any statistic they can find, throwing bar charts and all sorts across the House at us. They try desperately to say that there will be a meltdown, a catastrophe or a depression. Many economists, industrialists and bankers are worried that if the Tories continue to talk like that—and they must take responsibility for what they say—they may talk down the economy. Lloyds bank said last week that talk of global meltdown raised a real danger of talking ourselves into a United Kingdom recession.
The Conservatives contribute—perhaps unwittingly—to that problem. Or maybe that is exactly what they want. They want to keep the ball rolling. They want to cash in on political opportunism whenever they can. That is their agenda. They play games and throw mud without ever saying how they would change things. Would they reverse the Bank of England's independence? We heard policy-making on the hoof from the shadow Chancellor when he tried to answer that question, until the hon. Member for Westmorland and Lonsdale (Mr. Collins) stepped in and said that other Governments have not laid out policy until after elections. Now we have the threat of their not being prepared to say what they will do about the Bank of England.

Mr. Townend: Rubbish.

Mr. Leslie: Will the hon. Gentleman say exactly what Conservative policy is?

Mr. Townend: We did not say that we would not tell the public. The Chancellor will not tell the public the tax


changes in the next Budget. We shall tell the public the policies on which we shall fight the next election in a year or two years from now. We shall not tell them now. Your party is in Government. It is your duty to debate the issue.

Mr. Deputy Speaker: Order. The hon. Gentleman knows that I have nothing to do with that.

Mr. Leslie: The hon. Gentleman is on the fast track towards becoming the new shadow Chancellor. They certainly need a new one following the performance given earlier by the right hon. Member for Horsham (Mr. Maude). We have just heard that Conservative policy has changed again within the past hour. The Opposition were not going to announce what they would do about Bank of England independence until after the next election. Now the hon. Member for East Yorkshire (Mr. Townend) says that they will announce their policy within the next two years, and we can look forward to that. Let us write the date in our diaries in red while we wait to hear what their policy will be. It is not only Conservative and Labour Members who will be interested. The whole country waits to hear what the Conservatives propose. The risk that their election would pose to the economy is substantial. The people of the UK need to know what they would do. [Interruption.] They can bluster all they want, but they clearly do not like to be asked what their policy is. They are all over the place on public spending, too.

Mr. Lansley: Would the hon. Gentleman try to explain something in the Chancellor's pre-Budget report rather than talking about Opposition policies? Why has the Chancellor reduced from 2 to 1 per cent. his economic assumption underlying public finances for growth in 1999–2000, while simultaneously increasing from £344 billion to £348 billion his anticipated Government receipts? Why does he forecast that growth will go down, but receipts go up? Is that another of the Chancellor's fantasy forecasts?

Mr. Leslie: That is an intriguing intervention. The Conservatives plainly do not want to talk about the solutions that they offer to the country. After all, this is only an Opposition debate.
The hon. Gentleman knows that the UK is not in isolation from the other countries of the world. We live, work, employ and manufacture in a global economy. We must recognise that worldwide downturns and problems will affect us. We must put policies in place that will get us out of difficulties.

Mr. Barry Gardiner: Does my hon. Friend agree that if the hon. Member for South Cambridgeshire (Mr. Lansley) had been in the Chamber earlier or, if he were here, had unblocked his ears while his point was being answered, he would know that revenue projections for next year are based on this year's growth, which has not been downgraded, not next year's growth which has been.

Mr. Leslie: I thank my hon. Friend.

Mr. Lansley: Will the hon. Gentleman give way?

Mr. Leslie: No. My hon. Friend the Member for Brent, North (Mr. Gardiner) offered the embryo of a great speech that we shall perhaps hear later this evening.

Mr. Lansley: Will the hon. Gentleman give way?

Mr. Leslie: No.
I want to focus on public finance and expenditure over the next three years. An extra £40 billion has been committed for health and education. That financial expenditure will not only bring benefits to the whole country in terms of better public services, improved infrastructure and better capital but have an impact on the economy as a whole. I am intrigued to know just what the Conservative party proposes. Conservative Members talk about the downturn, the slump, the great depression and the meltdown that they foresee, or rather they would love to see as they rub their hands, yet they want to slash public expenditure right at the time when the supposed downturn is taking place.
I want to know from the Front-Bench spokesman how the Conservatives reconcile cutting public expenditure at the time of a supposed downturn. Do they not realise that that would magnify all the economic problems as a result of changes in the global economy and hurt this country in a much more significant and ingrained way? I should like to know whether they realise what effect their proposed massive spending cuts would have on the economy. Such cuts would be devastating. The Conservatives' blindness to even the most obvious economic factors will come to haunt them at the next general election.
There were discussions earlier about exactly what public spending on services the Conservative party would consider cutting. We all know that health and education would be a target. The Conservatives were specific in setting out the social security budget as something that they wished to target. They would scrap the £5 billion of expenditure on the new deal to get people off benefit and into work, which is thereby reducing unemployment and, as a corollary, cutting costs to the Exchequer such as jobseekers allowance and other things over the long term. That is the way to bring down social security expenditure, and that is exactly what we are doing.
The Conservatives want to scrap the working families tax credit. They are not bothered about the poverty trap or getting people off benefit and into work. It is the old, 1980s Conservative party coming back and haunting us. I am not old enough to remember the election of Margaret Thatcher in 1979—[Interruption.] Well, I probably am, but it might not have been the first thing on my mind at that time. It was refreshing to hear again all the mistakes that were made in the 1980s. The Conservatives still have not learnt. They want to start right back where they began. They have no concept of where they went wrong. That is good because, as long as they do not realise what is happening, the rest of the country will. We realise what is going on and the people realise what went wrong, but the Conservatives are absolutely nowhere on economic policy.

Mr. Geoffrey Clifton-Brown: The hon. Gentleman seems to be advocating the old Labour Keynesian economics of spend, spend, spend. Can he explain why some of his socialist friends in Governments in Europe, who are much better at spending than his Government, have higher unemployment than Britain? Will his Government have higher or lower unemployment when they leave office—in the not too distant future, I hope—than when they took office?

Mr. Leslie: There we have it—the dogma of the Conservative party. Conservative Members wish to slash vital public services regardless of the effect on the


wider economy. They are oblivious to the needs of the wider economy and the state of demand in this country. The effect of cutting public services would be astronomical. Conservative Members need to think carefully about their position.
During proceedings in Committee on the Finance Bill, the Conservative party proposed a number of changes. They moved a series of amendments which amounted to a £6 billion reduction in the funding available for public services. So as well as opposing the windfall levy on the privatised utilities, the Conservatives have committed themselves to reducing the funds available for public services by £6 billion. They have a variety of choices available to them. They could add the extra money that they would need to borrow, raise other taxes to compensate, which is what I suspect is on their agenda— they would increase VAT on fuel, among other things— or they could cut vital public services. Those are the questions that the Opposition need to answer and pursue.
We have heard today that the Conservatives threaten the basic state pension and its uprating by inflation. Perhaps when they target social security expenditure, they also threaten child benefit and benefits for disabled people. We shall have to find out in the coming months. We await their policy with interest.
The state of the economy is interesting, not least because we have to acknowledge that we do not live in a vacuum. I think that the Conservative party sometimes imagines that we do. The old protectionist agenda cloaks it in its historical role. There have been significant international changes. Change has occurred in Japan and ricocheted around Russia, and through Latin America and other areas. Serious threats have been posed by large financial institutions such as the hedge funds, Long-Term Capital Management and others. Economic issues affect us all.
I am proud of the leadership that has been shown by my right hon. Friends the Chancellor of the Exchequer and the Prime Minister on the international level in the G7 and other forums to move to a more transparent international financial system, to ensure greater supervision and regulation of large capital movements and to ensure that the International Monetary Fund and World bank are more able to nip embryonic problems in the bud. That is an important point. As we saw on Monday, the Conservatives have no answers to give.
The Government have put us on the right course to the sustainable, high-productivity, high-growth economy that we all want by setting domestic fiscal policy, committing themselves to public spending and the capital expenditure that we know is so important. The monetary policy framework has been set out, with independence for the Bank of England so that stable, long-term objectives can be met. I congratulate my right hon. Friend the Chancellor of the Exchequer on putting those firm foundations in place.

Sir Michael Spicer: The hon. Member for Shipley (Mr. Leslie) made a good speech for the first 90 seconds. He was right about the Liberals. Given his Front-Bench's love-in with the Liberals I am not sure whether he will earn himself promotion, despite

all the flattery in the last part of his speech—it was not such a good speech at the end—but he is right about the Liberals. He was especially right in saying that, although the Liberals would increase taxes—they are unashamed about that; it is something that they think would be a good thing—the revenue would in no way meet the bills for the profligate suggestions that they make. Never a day goes by without some Liberal spokesman making some great grand gesture for expenditure. The idea of the hon. Member for Gordon (Mr. Bruce) that the Liberals are the people who have the balanced view is wrong. The hon. Member for Shipley was right to point that out, and I am glad that he did.
The real irony of this debate has been that for the past two hours, Labour Members, including the hon. Member for Shipley, have been jumping up and down like a jack-in-a-box defending the independence of the Bank of England and asking all sorts of rude questions of us. Yet they are the same people—including the Chancellor, to whom I put this question in an intervention—who are hellbent on abolishing the independence of the Bank of England and handing over its reserves and powers to the European central bank. It is an enormous hypocrisy on the part of the Government and the governing party to pretend to take the line that they do when they are hellbent on abolishing the independence of the Bank of England.
Those who have not been jumping up and down defending the independence of the Bank of England are likely to be those such as the Chief Secretary who are muddled about the exact nature of that independence. As my hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) pointed out in a sharp intervention earlier, the nature of that independence needs thinking about carefully, especially on the afternoon when the Monetary Policy Committee is deliberating on what interest rates will be tomorrow. I congratulate my hon. Friends on the Front Bench on having chosen today for this debate, and I am glad that Labour Members have raised the pertinent question of the Bank of England, on the very day that the Monetary Policy Committee sits.
The Chief Secretary to the Treasury does not appear to have taken on board the exact nature of the remit given to the MPC. It is worth quoting section 11 of the Bank of England Act 1998, because in meetings of the Select Committee on the Treasury, it has become clear that many Labour Members are becoming more and more muddled about the role of the MPC. That role is clearly defined in section 11, which states:
In relation to monetary policy, the objectives of the Bank of England shall be—
(a) to maintain price stability, and"—
this is the crucial point—
(b) subject to that, to support the economic policy of Her Majesty's Government".
The legislation goes on to define how the inflation target is to be set. None of that is the same as that which applies to the Federal Reserve or the European central bank. Therefore, it is interesting and relevant to make clear the role of our central bank in relation to economic policy.
Given that extremely tight context, which makes the inflation target the only real objective that the MPC has to consider as a matter of priority, it is relevant to ask what inflationary pressures face the MPC this afternoon. That is not a subject which has arisen in our debate, but it is one that the members of the MPC will discuss if they


are doing their job properly, according to statute and the law of the land. It is by no means an easy question for the MPC to answer.
The first point is that not one single forecast provided by the Government shows any sort of undershoot of the inflation target. Most of the forecasts veer either towards the target or above it, but no one is talking about there being an undershoot of the statutory target at the current rates of interest. I did not invent the target—the Government invented it and they set the law of the land.
If, when looking at inflationary forces, one takes the figures for broad money, one sees that the latest figures show that 12-month growth rates have risen to 9 per cent. from 8.7 per cent. in August. The money supply is a definite determinant of the rate of inflation. Although there are arguments to be had about how strong a factor it is, no one would deny that, if one is printing more money, one is creating inflationary pressures. The figure for M4 is currently rising, not falling. Furthermore, no one would deny that the labour market is still extremely tight—for example, unemployment is considerably lower than it was in the first quarter of this year.
The hon. Member for Shipley asked why we worry so much about expenditure, which brings us to the question of the Government's fiscal policy. That policy has to be seen, not only in terms of new hospitals and the context in which the Government wants it to be seen, but in terms of its effect on the MPC's remit on inflation and, therefore, its effect on interest rates. One of the hypocrisies that we hear time and again from hon. Members of all the other parties, including the Liberals, is their failure to take the point that, having for better or worse established by statute such a clear-cut policy on inflation—I personally think that having a fixed inflation target is for the better—if they are profligate in public spending and print money in the way they are printing it, the effect can only be to force the MPC to keep interest rates up, with all the detrimental effects on unemployment and other economic consequences that that carries with it. That is the point which continues to be missed: if the Government are profligate in their fiscal policy and spend beyond what the country can afford and if, therefore, inflationary pressures are created, it will result in higher interest rates and in poverty.

Mr. Andrew Love: The hon. Gentleman has twice mentioned the so-called profligacy of the Government's public spending targets. Will he tell us in which areas he would make cuts in order to bring public expenditure back under control?

Sir Michael Spicer: The hon. Gentleman's party is in government and it is the Government's job to set targets and to write statute. It is up to them. That is what winning elections means: if one wins an election, one is in charge of priorities. I do not have the books in front of me and I do not know the Government's priorities. I can list various things that I would not be doing were I in government— for example, I would not be reforming at vast cost to the country the highly effective GP service that the Conservative Government left behind. There are many things that I would not be doing, were the Conservatives in government, but, sadly, we are not in government.
It is the responsibility of Labour Members, whose party is in government, to go to the councils of the parliamentary Labour party, or wherever such matters are

discussed, and determine what action will result in a public expenditure policy that keeps interest rates down. That is the point which Labour Members keep missing. They Miss it because many of them believe that, somehow or other, someone will give the thumbs down to the Governor of the Bank of England and the MPC when they try to raise interest rates. They have not read the statute properly and believe that we operate the same system as the Federal Reserve, but we do not: we live under a different system, one which is of the Labour Government's own making. It is the Labour Government who have to find the solution; otherwise, interest rates will continue to rise. The question is whether the pressures from public expenditure will, as the Government suggest, create a balanced economy.

Mr. Love: Does the hon. Gentleman agree that it is dishonest of the Opposition to set up this debate to chide the Government on their economic policy, but to refuse to offer any alternatives on the best way forward?

Sir Michael Spicer: It is not the job of the Opposition to govern the country. That is what the electorate determined a year or so ago. As my right hon. Friend the Member for Horsham (Mr. Maude) said, why should the Government come crawling to us for solutions to problems that are entirely of the Government's own making? That is the crucial point.
The reason the problems are of the Government's making is that, when one examines the concept of balanced growth, of which the Government have been making much for the past 24 hours, one realises that it does not stand up. The growth assumptions on which the so-called relatively balanced budgets are projected simply do not stand up to scrutiny. No serious economist or commentator would agree with the Government's growth projections, or be able to give any reason why the projections should be increased for the year after next. That is the most extraordinary thing for the Government to have done.
Even given the Government's own projections, the MPC is sitting down this afternoon having to take into account a deficit for the next five years that is £11 billion higher than it had to consider when it last discussed interest rates. That £11 billion has arrived out of nowhere, based on extraordinarily optimistic growth figures. Although it has not been widely noticed, it is no wonder that long-term interest rates have begun to harden in the past 48 hours. That is absolutely logical.
I asked the Chancellor yesterday how he can square a profligate expenditure programme with trying to help the MPC to reduce interest rates. I got no answer. The members of the MPC must be scared out of their wits this afternoon as they consider the public expenditure plans in cold print in the context of the interest rate policy, which no doubt they want to try to accommodate with what are conceived to be the nation's needs on growth, unemployment and so on.
Unless the Government stand ready to change their expenditure or tax plans if their growth forecasts prove to be wrong—we have not heard anything to that effect— the MPC can have no alternative but to assume that the Government are embarking on an expenditure programme that the nation is unlikely to be able to afford and which will therefore be inflationary. Given the Government's


stance and, above all, the terms of reference that they have set the MPC, it would not be surprising if the committee decided to hold interest rates at their present level. The crucial point is that the nation should understand that all the pain that that would cause would be entirely the Government's fault.

Mr. Geraint Davies: There has been a pathetic and miserable attempt by the beleaguered Opposition ranks to talk down Britain. They are not in the real world, let alone the global economy. Opposition Members think that we can arbitrarily set interest and exchange rates as if Britain exists in a vacuum. They live in a fantasy land of away days dreamed up by the Leader of the Opposition where everyone dresses up as Val Doonican and pretends that the UK floats around on its own.
Global circumstances are difficult. A quarter of the world is in recession; global growth forecasts have been halved; the US is rescuing hedge funds; the Japanese are rescuing banks; Hong Kong is rescuing companies; and the UK has, rightly, adjusted its growth rates. Where has the Tories' black hole gone? Why has it disappeared?
First, the starting point of the economic analysis is much better than people had assumed. The 1998–99 Budget forecasts growth of 1.75 per cent., but that has been revised up to 2.25 per cent. because, under Labour, the economy has fared much better. [Interruption.] No, it is true, and therefore public expenditure has improved and borrowing is lower. Prudent management has reduced the budget deficit from £28 billion a year to £8 billion a year. The projected surplus over five years is £33 billion. A reduction of 1 per cent. in the gross domestic product growth rate would cost £6 billion over two years, so there is a large margin of opportunity for manoeuvre.
The revised growth targets and rates are realistic and cautious. People will remember that the Chancellor revised the original trend forecast from 2.5 to 2.25 per cent. The economy is in good shape to face a slowdown which, by now, everyone should accept will occur.

Mr. Bercow: Like other hon. Members, I am accustomed to the hon. Gentleman's display of gut-wrenching deference to the European Commission in most debates. Will he explain to the House whether he agrees with the European Commission's prediction that this country will next year slump to the bottom of the European growth table; if not, why not?

Mr. Davies: The last time the hon. Gentleman spoke after me, his mother was in the audience; sadly, she is not here to take him home. I shall move on to EU growth rates in a moment. It is important that we discuss why the growth rate projections from the European Commission are lower than they were.
We are In good shape to face a slowdown in the world economy because the Government have cut debt and controlled expenditure and inflation, and interest and exchange rates are beginning to fall. If the Conservatives were in power, with their resistance to the independence of the Bank of England and current interest rates, inflation would go out of control and, in the midst of a downturn

in the global economy, they would increase interest rates at the worst time while cutting back on public expenditure on health and education. That would be a disaster.
Looking back over the past 18 years, it is remarkable that the Conservatives caused two domestic recessions when the global environment was relatively stable. We now face choppier waters in the global economy and this Government are steadily and surefootedly leading us ahead using long-term investment.
The European Commission has forecast growth rates. First, anyone who has rudimentary knowledge of economics—which the hon. Member for Buckingham (Mr. Bercow) appears to lack—knows that Britain is at the top of the economic cycle and other economies are at a different stage. The economy is near capacity, but we have created an extra 400,000 jobs since we have been in power. The economic management challenge for the Chancellor is to put into productive work more people who have been dislocated from the economy through lack of training or opportunity. We have introduced the new deal and the working families tax credit to make work pay for people who were left on the scrap heap by the Conservatives.
We have done so well and are so high in the economic cycle that we have fewer opportunities for growth than our European counterparts. As I said, interest rates are beginning to fall because of the slowdown in the world economy. Exchange rates are now 10 per cent. lower; the pound has fallen from DM3.10 to DM2.75. Britain will come out of the slowdown more quickly and strongly than other EU countries, and that is implicit in the growth forecast. Hon. Members may ask why, and I shall answer that in a moment.

Mr. Desmond Swayne: I acknowledge the hon. Gentleman's point that Britain is at a different stage in the economic cycle, to which he has pertinently drawn attention. Will he develop his argument further and say what are the principal causes of our cycle being different from the continental norm and what measures the Government will take to correct that so that we can enjoy the benefits of a single European currency?

Mr. Davies: I am glad that certain Conservative Back Benchers are so enthusiastic about the single European currency.
Current and past events demonstrate that the United States and the UK lead the economic cycle while the core of Europe—Italy, Spain, France and Germany—lags. The UK and the United States went into recession in 1991, and France, Italy, Germany and Spain did not follow until1993. The UK and the US began to move out of recession by 1992, but the rest of Europe did not follow until after1994. Those cycles explain some of the changes in the EU forecasts of which the shadow Chancellor, the right hon. Member for Horsham (Mr. Maude)—who, I presume, has returned to Asda—has made such play.

Mr. Swayne: Will the hon. Gentleman give way again?

Mr. Davies: No, because I know that other hon. Members want to speak.
The first of the Government's main planks for tackling economic developments has been to introduce monetary stability through the independence of the Bank


of England. That means that interest rates are now responding to the global environment rather than the domestically created environment, as under the Howe and Lawson recessions.
Secondly, although we inherited about £400 billion of debt, which was costing £28 billion a year, we have brought those costs down to £8 billion a year. As a result, we need not make cuts in health and education spending; in fact, we have drastically increased that spending, by £40 billion. The Opposition would obviously cut some of that amount from their pronouncements about our recklessness. They deny that, but it is self-evident.
Thirdly, as has been alluded to, Britain is now a leading player—the Chancellor is probably the leading player—in pioneering international reforms to enable us to live in a more stable world, by supporting reforms of the International Monetary Fund and making financial transactions transparent. Governments are shaping the future, instead of reacting like headless chickens, as they did previously. You will remember, Mr. Deputy Speaker, how humiliating it was for the Conservatives when we dropped out of the exchange rate mechanism.
Fourthly, we have the welfare-to-work measures—the new deal, making work pay, to bring back into the productive economy more and more people left permanently on the scrap heap by the Conservatives.
Fifthly, we have a focus on increasing productivity. It is no use saying, "It has nothing to do with us." In productivity, we lag between 20 and 40 per cent. behind many of our competitors. We are in the process of generating an enterprise culture by linking business enterprise into the school and university system, by encouraging venture capitalists and by encouraging regional development. Our challenge is to engage more people in the economy and to make them more productive, to make the whole of Britain more successful. Those changes, be they in management training, venture capital or enterprise, are some of the assumptions that underpin the Chancellor's cautious growth rate projections, which have been dismissed by the Opposition, who have no ideas for improving British industry.
If the Tories were in charge today, there would be no new deal. Where would they find the £5 billion? The people would still be on the dole. There would be no increase in opportunities for affordable work, so people would languish on the dole. There would be no Bank of England independence, so interest rates would have been held back for political reasons, then jacked up as the world economy slowed. Finally, there would be savage cuts in health and education. Opposition Members ask, "What about the welfare budget?" I remind them that, when we talk about welfare, we talk about old people, pensioners, children and the disabled. All those people would suffer if the discredited Opposition had an opportunity to govern, as has again been revealed today.
I very much commend the opportunities that have been placed before the British public again by our magnificent Chancellor, and I am happy to reject the ridiculous motion and to support the Government amendment.

Mr. John Townend: With respect, some Labour Members need to learn that the Opposition's job is not to do the Government's job, but to hold the Government to account. I shall try to do the latter in my contribution.
This is supposed to be a green Budget. Incredibly, in yesterday's statement and in today's debate, Labour Members have hardly mentioned the word "taxation". Yesterday, I tried to intervene on the Chancellor. I now ask the question that I would have asked him, and I hope that, in her reply, the Economic Secretary to the Treasury will answer me. My question is, do the Government expect that, in this Parliament, the total burden of taxation—national and local—will rise or fall as a percentage of our national wealth? It is a simple question; I should like an answer.
Yesterday, as I listened to the Chancellor's statement, I was struck by his self-satisfaction, and his complacency and gross optimism made me think that he was living in cloud cuckoo land. He was self-satisfied about the condition of the public finances, and proudly boasted that this year the budget would be £5.5 billion in surplus.
Hon. Members who have been in the House for a long time know that I always welcome a surplus. However, the Chancellor did not say who has paid for that surplus. First, it has been paid for by tomorrow's pensioners, who have seen the Government rape their pensions by no less than £5 billion—not in one year, but every year. Secondly, it has been paid for by the motorists, who have suffered the biggest increase in fuel tax in living memory, yielding the Government an extra £2 billion a year. For the first time in my life, it is possible, on the way home from the continent, to fill up in Calais more cheaply than in this country.
Obviously, we have an anti-motorist Government, who are hitting people who live in rural constituencies such as mine, who need a car to get their children to school and to get themselves to work.

Mr. Gardiner: Does the hon. Gentleman accept that it was stated in the previous Government's Budgets—their plans were laid out for all to see—that fuel tax would increase each year? Does he accept that, in the first year of the Labour Government, we are keeping exactly in line with those plans, so the increase was as projected by the Conservative party?

Mr. Townend: That is not correct. The Government have inflated the increase by far more than we would have done.
I readily accept that the previous Government made a mistake in putting up tax to that level—falling for the greens—but the present Government have put it up by 6 per cent. more than inflation. If that process continues for five years, there will be a horrendous increase of 30 per cent. more than inflation.

Mr. Clifton-Brown: My hon. Friend has given the House the correct figures. The Government have increased the fuel tax inflator by 6 per cent. over and above inflation, and value added tax is imposed on top. That means that his and my constituents, in rural areas, will face a staggering 35p a gallon increase in April 1999. Does he believe that his constituents will be disadvantaged by that?

Mr. Townend: I do, and I assure my hon. Friend that I shall urge the Conservative Front-Bench team and the Leader of the Opposition not to go into the next election


as an anti-motorist party. I should like us to give a commitment not to increase the price of petrol by more than inflation. That, of course, is a personal opinion.
I shall now talk about complacency. The Chancellor is still fighting the last battle—the battle against inflation—whereas the battle that threatens us in the months ahead is the battle against deflation. As was correctly pointed out yesterday, Japan, the second largest economy in the world, is suffering from deep deflation. Despite an interest rate of 0.25 per cent., its economy is shrinking rapidly, with no sign of recovery. Russia is broke, and the German banks will have a large write-off of their Russian debts. Latin America is teetering on the edge of a financial crisis. Those events, and the problems of some of the American hedge funds, have severely weakened and damaged the world banking system, to an extent as yet unknown.
However, I believe that, in the United Kingdom, despite the Chancellor's optimism about growth next year, we face recession. Agriculture is in deep trouble. Farm incomes are collapsing. Bankruptcies are increasing. Regrettably, because of their Euro-fanaticism, the Government are taking no meaningful action to tackle that problem. As a result, in the beef and pig sectors, British farmers do not have a level playing field with the continent.

Mr. Love: According to Budget projections, growth should be about 1 per cent. next year, increasing to 2.5 or 2.75 per cent. in succeeding years. Is not the hon. Gentleman's talk of recession actually talking Britain down?

Mr. Townend: Certainly not. It would be pointless for me, a representative of a rural constituency, to pretend in the House that everything in the garden was lovely in respect of agriculture. I should not be doing my job if I did that. I am not a professional politician like many people here. I entered politics as a business man because I believed in things. It has always been my practice in the House to say what I think—even if my comments are not always approved by my own party—and I do not think that the hon. Member for Edmonton (Mr. Love) is right.
I should be very surprised if the hon. Member denied that manufacturing industry has for months been suffering because of the high pound and high interest rates. Now, service industries are weakening, and each week brings more announcements of job losses in banks and City financial institutions.
I am very proud to be one of that small and—I should like to think—distinguished hon. Members who have run and owned a small business. I am therefore able confidently to tell Ministers, "I know what is going on out there." I can also tell the Chancellor that, in the past six weeks, in the north of England—not only in manufacturing, but increasingly in service industries—small businesses are suffering from the downturn and from declining profitability.
I know that the Chancellor will say, "I'm not to blame." Labour Members have already said, "We're not to blame—it's the world economy." What rubbish— [Interruption.] Labour Members laugh, but do they deny that small businesses' profits are falling largely because of the rising costs of implementing Government legislation? The Chancellor should be more honest and accept his share of the responsibility.
Does the Economic Secretary to the Treasury really know the cost to small business of implementing the working time directive? The directive is having a serious effect on the hotel and hospitality industry in my constituency. It is also undermining the split-shift system that is vital to the industry. Furthermore, individual proprietors, small business men, are having to keep far more detailed records—do far more paperwork—to satisfy the horde of Government inspectors who will enforce the regulations.
Does the Economic Secretary realise that the cost of the minimum wage to small business is not only the cost of merely raising workers' wages to the minimum wage, but the cost of raising the remuneration of those earning more than the minimum wage, to retain differentials?

Mr. Bercow: Does my hon. Friend agree that Ministers are guilty not only of arrogance but of ignorance? Last week, on the Floor of the House, the Chief Secretary, and this morning, in Select Committee, the Secretary of State for Trade and Industry were both utterly ignorant of the report recently produced by the distinguished firm of accountants, Chantrey Vellacott. It showed that the rise in regulatory burdens in the first two years of this Labour Government will be no less than 17.3 per cent. Is not their ignorance of that dramatic impost on British business a worrying portent for the future?

Mr. Townend: My hon. Friend is right. Furthermore, do not Ministers show their hypocrisy when they talk about productivity and competitiveness? It is the Government who have been destroying the competitiveness of much our industry.
Does the Economic Secretary know the cost to small business of implementing the packaging waste regulations that came from Europe? Does she realise the cost to small business of implementing the new European parental leave regulations—which came to Britain as a consequence of accepting the social chapter? Does she realise how massively costs to small business have been increased because of fuel tax increases, particularly on DERV? Every small business is involved in the delivery and the receipt of goods.
Does the Economic Secretary appreciate the burden of high interest rates, which bear down disproportionately on small businesses, which suffer from one of the highest overdraft rates in Europe? The Chancellor says, "Don't blame me, guv—blame the Bank of England." The hon. Member for Shipley (Mr. Leslie) gets very excited and asks whether Conservative Members would take away the Bank's independence. That question will probably be irrelevant because, if the Chancellor has his way, the Bank of England will have no independence, its functions having been transferred to Europe. We should certainly like to take away the independence of the European central bank and maintain our own independence.
Interest rates are the Chancellor's responsibility. He was the one who gave away the right that he and his officials had to fix the Bank rate. He must have done that because he did not think that he and Treasury advisers were capable of fixing interest rates at a level that was appropriate for the efficient running of the United Kingdom economy. Alternatively, perhaps he gave away the power because he did not think that he would be able to resist the political pressure applied by his spendthrift colleagues.
When we talk about lowering interest rates and reducing inflation, Labour Members should realise that—as my hon. Friend the Member for West Worcestershire (Sir M. Spicer) said—there are two sides to the equation: whereas a tighter fiscal policy allows lower interest rates in ensuring economic efficiency, a lax fiscal policy and high expenditure necessitate higher interest rates. Yesterday's green Budget proposed some small measures that will help. However, compared with the burdens on small business that the Government have imposed since they have been in power, those measures are chickenfeed.
I should like specifically to deal with tax incentives enabling employees of large companies to buy shares in the companies in which they work. Although I welcome such incentives, they distort the investment situation to the detriment of those who work in small businesses and are unable to buy shares, because the businesses in which they are work are either sole traders, partnerships or family-owned companies in which the family is not prepare to allow equity to be held outside a small family circle. If the Chancellor really wants to encourage saving and investment, he should give equivalent tax allowances for stock market investment to people working in small businesses.
All the signs are that the Government will end up like every other socialist Government—as a Government of high spending, taxing and borrowing. For the sake of our country, I hope that I am wrong. However, I believe that the pre-Budget statement will come back in future years to haunt the Chancellor. Ultimately, it will be the British people who will pay for his complacency.

Mr. Geoffrey Clifton-Brown: What a difference a year makes. In last March's Budget statement, the Chancellor was predicting that the economy was growing at an unsustainable rate, and maintained that interest rates might have to rise five times. He predicted also that the Bank of England would be able to meet its inflation target by using only one narrow measure: raising interest rates. If the Government had not run such a tight fiscal policy, the Chancellor would be able to reduce interest rates, and our competitive exchange rate would be down much more than it is from the April 1998 level of DM3.1 to the pound.
Last March, the Chancellor predicted growth of 1.75 to 2.25 per cent. He now states:
My forecast for 1999 of 1 to 1½ per cent. growth in our economy will see Britain steering a stable course, even when one quarter of the world is in recession."—[Official Report, 3 November 1998; Vol. 318, c. 682.]
How can anyone accept the Chancellor's predictions when, only yesterday, he had to reduce so drastically his previous growth forecast? What growth rate will he forecast by the time we get to the real Budget, next March? I suspect that he will have to reduce his growth forecasts even further.
Britain's leading financial institutions are forecasting growth rates that are lower than those complacently forecast by the Chancellor. For example, Barclays bank predicts a growth rate of 0.8 per cent. next year; Goldman Sachs predicts a rate of 0.5 per cent; Morgan Stanley predicts a rate of 0.5 per cent; Warburg predicts 0.3 per cent; and JP Morgan predicts no growth whatever.
Regrettably, the Chancellor's forecast is complacently high. He is complacent about the amount of tax take that he will have next year and wants to spend more in real

terms on the health service, on education and, above all, on social services. Indeed, next year the social services budget is likely to bust through the £100 billion mark for the first time ever.

Mr. Geraint Davies: What cuts would the hon. Gentleman make in health and education? Is he keen to cut funds for the disabled, children and pensioners? The shadow Chancellor would make no commitment to retain the state pension. What else would the Opposition cut?

Mr. Clifton-Brown: That is a stupid question. Labour are in government, and it will be found that over the economic cycle the Labour Government have spent money unsustainably. If the hon. Gentleman really wants to know how to save money, he should look at the £7 billion of fraudulent claims in the social security system. What about the £1 billion budget for health service computers, which do not even work properly and are unlikely to meet compliance targets by 2000? What about the £150 million wasted on reforming the GP fundholding system in the huge primary care groups, which will disadvantage my constituents? Savings can be found in plenty of areas of Government policy, if only Labour Members had the imagination to look for them.

Mr. Davies: rose—

Mr. Clifton-Brown: I hope that the hon. Gentleman's next intervention will be a little more sensible than his last one.

Mr. Davies: Does the hon. Gentleman accept that the previous Government had 18 years to make savings from the long list that he has just given, particularly from social security fraud, but that they failed to do so?

Mr. Clifton-Brown: We left the Government a golden economic legacy. Such a scenario, with growth exceeding inflation, has been achieved only twice since the war. That is the only way sustainably to increase Government expenditure commensurate with lower taxes.
I now wish to deal with the subject of keeping taxes down to their optimum level. We spent 18 years encouraging inward investment and were very successful at it. One year, we had a quarter of all Europe's inward investment from firms such as Siemens, Fujitsu and Lucky Gold, which all invested huge sums in this country. They are now so worried about our long-term economic future that they have decided that it is no longer viable to remain here. We shall lose jobs. The Government are far too complacent about the employment figures. No Labour Member has been able to say whether employment will be higher when Labour leaves office than it was when they took office. I fear for the jobs of my constituents and those of other hon. Members. Jobs will be lost over this economic cycle owing to the Government's economic mismanagement.
One has only to look at some of the measures, both economic and social, that the Government have implemented. One of the first was to join the European social chapter; emerging from that was the disastrous working time directive. They have instituted domestic measures, such as the minimum wage, which will damage employment. All those measures combined will lead to an unemployment rate that is common in Europe, but not yet common here.
In Europe, the average unemployment rate is 10 per cent. and there are almost 20 million unemployed people. I never want to see this country with unemployment rates approaching that figure, but I fear that the Government's complacent economic policies will lead us in that direction.

Mr. Bercow: My hon. Friend is developing a powerful thesis. Does he share my shock that, this morning, the Secretary of State for Trade and Industry described the estimated annual £200 million cost of the parental leave directive as "marginal" and merely a drop in the ocean? Is not that outrageous?

Mr. Deputy Speaker: Order. Before the hon. Member for Cotswold (Mr. Clifton-Brown) resumes his speech, may I advise the House that only a short time remains for Back-Bench speeches? Constant interventions will remove the opportunity for some hon. Members to speak.

Mr. Clifton-Brown: I shall observe your strictures, Mr. Deputy Speaker, and try to be as succinct as possible.
My hon. Friend is absolutely right. The red tape that has been imposed on businesses, particularly small businesses, which has come from both this country and Brussels—

Mr. Ivan Henderson: Will the hon. Gentleman give way?

Mr. Clifton-Brown: Labour Members cannot hear, let alone understand; and if they cannot hear, they cannot understand.
I am worried that the Item Club predicts the loss of 500,000 jobs in this country. Some of the policies introduced by the Government seem to be leading us in that direction.
I wish to deal with fiscal policy. There have been five base rate increases since the Government came to power. Interest rates are now at an unsustainable 7 per cent., which is 2 to 3 per cent. above the European average. That imposes huge cost burdens on businesses, particularly small businesses. However, the most important factor is that millions of people are paying more for their mortgages each month than they need to. Interest rates could now be lower if the Government had not botched up matters. We should look towards more stable spending, and the Monetary Policy Committee must decide whether confidence will prevail in the world economy. If it does not, the problem will not be meeting inflation targets; it will be deflation.
The world economy is based on confidence. In Japan, confidence has disappeared from the system and the Japanese Government have had to take extraordinary measures to try to reflate the economy. Just last week, they gave each man and woman £160 each to spend in an attempt to boost the economy. If confidence starts to disappear from the American economy, we shall all be affected. As an old prophet said, if General Motors catches a cold, we all catch 'flu—or something like that. If the American people stop spending, we shall undoubtedly be hit.
I urge the Government to look seriously at the role of the Monetary Policy Committee. First, it needs to be given a much wider role, not just the single remit of hitting an inflation target set by the Government at 2.5 per cent. That could drive the country into even deeper recession. Secondly, the Government should look at the MPC's composition. Only one member of the committee has had real experience of business, so members do not understand the misery that they are imposing on small manufacturing businesses by not running a more realistic interest rate policy. An interest rate that is more in line with those in Europe would make this country more competitive.
I wish quickly to mention a number of other issues. A Cabinet Committee is looking into public expenditure. Will the Economic Secretary explain what would happen if a Government Department were to overspend its budget? We are told that some expenditure might be held back next year. Does that mean that if the Department of Social Security overspends, some people will not be paid their jobseeker's allowance next year?
The Government's economic policy has led the country into recession, and we shall go into deeper recession still. This afternoon, the Prime Minister could not make up his mind on one of the most important economic topics that the country has faced since the war—whether to join European monetary union. He could not tell us whether, in principle, we would join—[Interruption.] Labour Members laugh, but it is one of the most important questions that business men want to know. The Prime Minister would not and could not say because half his party is opposed to it, and half is in favour, and he does not know what economic conditions will be in place when we face the prospect of a referendum. Therefore, why cannot he tell us whether he is, in principle, in favour of joining if the economic conditions are right? I believe that that is what his policy is, but why cannot he tell the House in clear terms what it is?
This recession has been made in Downing street. We will get a deeper and deeper recession. Tax receipts will drop, unemployment will go up, and we can blame it fairly and squarely on the Chancellor's botched economic policy.

Mr. Edward Davey: When the House has debated the record and policies of Chancellors, it has debated the mix between monetary and fiscal policy: whether he is going for a tight monetary policy with a tight fiscal policy, or some other combination. Since the Government made the Bank of England independent, with the possibility of the euro down the track, our debates on the economy have changed. We welcome that, but what the House has not caught up with is the different ways in which fiscal policy can be actively used to affect the management of the economy.
One of our major criticisms of the Government is that they have not caught up with the dynamics of the changed decision-making process that they gave birth to. We feel that the Chancellor and Her Majesty's Treasury are not taking sufficient account of the effect of their fiscal policy on the interest rate decisions of the Bank of England.
So we have to start at the basics—analyse the way in which active fiscal policy can work. The Conservative Government, particularly in the Lawson era, said that


active fiscal policy had no role in demand management. The new Government have rejected that ideology, but they have not made it clear how they envisage fiscal policy working in the short and medium terms.
The Government have set fiscal rules. They have set a framework for the long-term direction of fiscal policy, which we welcome, but they have not made clear how they envisage the role of fiscal policy in the short and medium terms. That is an important theoretical issue, with practical implications because of the independence of the Bank of England and the way in which fiscal policy, set in the short and medium terms, affects its decisions.
There are three ways in which fiscal policy helps in managing the economy. First, there is the aggregate effect—tightening or loosening fiscal policy can affect aggregate demand. Of course, there can be cyclical tightening or loosening, but there is also discretionary tightening or loosening. That is the decision of the Chancellor: whether, on a discretionary basis, he wants to take money out of the economy, or put it in through tax and spending.
Secondly, the way in which fiscal policy is tightened or loosened can affect the economy—the decision between different taxes and different spending; between whom in the economy to hit with taxes and whom to relieve of taxes; the decision on whether to increase public sector pay of certain groups of workers. All those types of decisions—micro-elements of fiscal policy setting—have a macro-effect. It is in that sector that the Government have made some of their major mistakes.
There is a third way in which fiscal policy affects macro-economic management. That is the rhetoric that lies behind the setting of fiscal policy because it can affect expectations of consumers and business. We saw that in the Lawson boom period. His rhetoric after the 1988 Budget seemed to suggest that national debt would be paid off, and that there would be income tax cuts for ever more. That engendered a feeling of euphoria, so people in the private sector borrowed loads of money and spent, spent, spent. Nigel Lawson's rhetoric fuelled the economic boom.
Similarly, the rhetoric of today's Chancellor is important in relation to the decisions that private sector agents take. Of course, with the independence of the central bank, the Chancellor's rhetoric is also important in relation to the Bank's decisions.
I am glad that the House has allowed me to explain the process in which fiscal policy affects economic management. When we look at fiscal policy from its theoretical basics, we can understand where the Government have made their mistakes in their first 18 months in office.
Our contention is that the Government got the fiscal policy judgment wrong in the July Budget of 1997. The Chancellor said in the House that the economy was unbalanced, manufacturing was slowing and consumers were still spending at quite fast rates, but the fiscal policy that he then proposed did not match that analysis. He failed to take the heat out of the booming sector—the consumer sector—but ladled taxes on to the sector in decline: the manufacturing sector.

Mr. Clifton-Brown: Does the hon. Gentleman agree that, if the remit to the Monetary Policy Committee had been wider than merely trying to meet an inflation

target—for example, if things such as growth and unemployment had been built into the remit—we would have had a more realistic fiscal policy last year?

Mr. Davey: I cannot agree with the hon. Gentleman. I do not think that there is a connection. It was his party that signed the Maastricht treaty, whose mandate for the European central bank was similar to that introduced by the United Kingdom Government, but my point is that the fiscal policy that was set in the July 1997 Budget was wrong.
In yesterday's pre-Budget report, the Chancellor set out the fact that fiscal policy was tightened on a discretionary basis. That is clear because the Government increased taxes on industry and savings and squeezed public spending in their first two years—there was a discretionary tightening of fiscal policy. However, they failed to apply the tightening of the fiscal policy correctly. They tightened it not on those people who were spending, but on those who needed help. That is why manufacturing has been hit so badly—because of the Chancellor's mistaken judgment on where the tightening should take place in the economy.
The rhetoric was wrong. It gave all the wrong signals. Consumers were not told that their actions—the way in which spending was still taking off—were damaging economic prospects. The euphoria of the election victory or the fact that the Government's hands were tied after their fairly irresponsible election promises never to use personal taxation to govern the economy may have been the Government's excuse; but if they are really serious about managing the economy for the long term, and we have heard how many times the Chancellor uses that phrase in the House, they should be prepared to take difficult decisions, tough decisions, on personal taxation when they are necessary.
The evidence that the markets felt that the Government had got their fiscal stance wrong in July 1997 was shown almost immediately after that Budget because there was a rise in the pound. The expectation was that, because of the Chancellor's fiscal decisions, interest rates would have to rise—and indeed they did.
The point of that analysis is to show that this downturn, the recession in manufacturing, has been directly caused by the Chancellor. It is, to use the soundbite that is so popular among Conservative Members, a recession made in Downing street. By using fiscal policy properly, we can affect our country's economic future, even though the Bank of England is in charge of interest rates.

Mr. Gardiner: I have listened with great care to what the hon. Gentleman has said about fiscal policy and tight fiscal policy. Does he recall his remarks on 10 July last year? He urged the House to face up to the need for higher interest rates. He blamed the Conservatives for their reluctance to raise them at the correct time, but also blamed the Government.
What did the hon. Gentleman blame the Government for? He blamed the Government for their too tight fiscal policy, yet at the same time he opposed the £5.2 billion tightening of fiscal policy, which was the windfall tax, and the £5 billion tightening of fiscal policy, which was the abolition of the advance corporation tax credit.
He should remember his remarks, made in this Chamber not so long ago, when he lectures the Government about fiscal tightening.

Mr. Davey: The hon. Gentleman quotes me out of context. In that full speech, I made it clear that it was the way in which the Government were tightening fiscal policy—the fact that they were loading taxes on the business sector—that was the problem. In our alternative Budget, we proposed clearly where taxes should go up, so it was not tightening of fiscal policy that we were running away from. We were criticising the Government for the fact that they were making the wrong fiscal policy judgments.
It is now time the Government looked at the way in which fiscal policy can be used to support the economy in the short and medium terms. They have had many reviews to do with fiscal policy and launched many papers about how it should be set for the long term; but with an independent central bank and with monetary union a not too distant prospect—I hope—the Government need to revisit fiscal policy theory and decide whether they are prepared to use fiscal policy actively to promote the interests of this country.

Mr. David Heathcoat-Amory: The House cannot take too seriously speeches calling for taxation to be used as a means of fine-tuning the economy. Those policies are understandable from the Liberal Democrats, because we know that they want to give up control of monetary policy to the European central bank in Frankfurt, which would leave us with only fiscal policy to regulate or control the economy, but we cannot take them seriously because they never say what they are calling for. What taxes do they want to increase, and what taxes do they want to reduce, now or in the future? Their policy is confused and confusing.

Mr. Edward Davey: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: The hon. Gentleman has made his contribution.
No economist seriously suggests that tax changes can be used to regulate the economy. They are too blunt and slow-acting in their effects. That is why it is generally accepted that interest rates must be used from time to time. It is a matter of regret that the Liberal Democrats want to give up that domestic instrument to a bank based in Frankfurt, whose interest rate changes would only by coincidence have anything to do with the domestic requirements of the British economy.

Mr. Davey: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: As I have referred to the hon. Gentleman, I shall give way.

Mr. Davey: The right hon. Gentleman incorrectly says that we have not stated our fiscal policy proposals. If he is so concerned about Opposition parties stating their policies, will he tell the House the Conservative party's policy on the independent central bank?

Mr. Heathcoat-Amory: The hon. Gentleman has a short memory. I do not remember whether he was a member of the Standing Committee that considered the Bank of England Bill. I think he was, in which case he will have heard us at length and repeatedly setting out our objections to the Bill. It was the wrong policy brought forward for the wrong reasons at the wrong time, in defiance of an election promise to the contrary. That is why we opposed the Bill. By the way, the legislation has not resulted in an independent Bank of England. If that is what the hon. Gentleman was after, he has not got it. All our criticisms and observations about that mistaken policy have turned out to be tragically justified and true.

Mr. Ivor Caplin: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: Later, possibly, but I am aware of the shortness of time.
I want to place on record our disappointment that the Chancellor, who had an opportunity in the debate to defend and explain the figures in his pre-Budget report, instead engaged in irrelevant bluster and obfuscation that left no one any better informed about the implications of his policies for the British economy.
We may be witnessing an unfolding tragedy, because the Government are defying almost all independent observers and commentators in their growth forecasts. Instead of recognising the severity of the growth decline that the British economy faces, the Chancellor has gone, almost isolated, for a little dip next year and then an extraordinary acceleration in subsequent years, way above what he forecast only four months ago. No explanation was given for this sudden spurt—a sort of millennium boost for the British economy that we are told will manifest itself in 2000 and thereafter.
In addition, the pre-Budget statement contains a £9 billion increase in public expenditure over the next three years, set out on page 121. Meanwhile, on page 120, the Government are assuming that unemployment will remain flat at its September level. No one can believe that that is a realistic or prudent assumption. Then the Chancellor tells us that his new annual borrowing requirement—what used to be called the public sector borrowing requirement before all the definitions were changed—will be less than he predicted only four months ago.
The truth, as has been widely said in the press, is that we are faced with fantasy economics. That discredits the Chancellor's announced policy for everyone else in the G7 of increased transparency and rigour in the publication of national accounts. If he continues to defy what the rest of the world knows about the real economy, he will undermine confidence in public policy.
I should like to re-engage the Chancellor for a moment with the real world of job losses and increased job insecurity. The small print of the pre-Budget document contains some evidence of a severe manufacturing downturn. Page 109 records, almost in passing,


that manufacturing output next year may fall by 0.25 per cent. The Chancellor did not refer to that in his statement, but it is in the small print. The same page contains the frightening fact that by far the fastest-growing items of national accounts are imports, which are increasing by 7.25 per cent. this year. The balance of payments will weaken by between £7 billion and £9 billion every year. That is the real economy.
I recognise and forgive the fact that no Treasury Ministers have any experience of running, or even working in, a business. Perhaps the only exception is the Paymaster General, who sadly attends none of our debates these days. He certainly has experience of dealing in a number of companies, but no one in the Government, from what I can tell, has ever worked in or run a business of any size, as my hon. Friend the Member for East Yorkshire (Mr. Townend) pointed out.

Mr. Gardiner: The hon. Member for East Yorkshire (Mr. Townend) referred to the distinguished and honourable club of those in the House who have experience of running a business. I count myself among the members of that club. I particularly recall the time under the previous Government when the exchange rate stood at ․1.95. Trying to run a business with such a high exchange rate was very difficult.

Mr. Heathcoat-Amory: I did not know that the hon. Gentleman had made it to the Front Bench. I was simply pointing out that no one in the Government had any experience of running a business. If the hon. Gentleman has such expertise, I wish that he had a little more influence.
I wish that the Government would at least listen to business men. Ministers may have no direct experience, but that does not mean that they cannot listen. We have heard nothing for businesses of any size from the Chancellor. He merely crows about his one great achievement, which was getting inflation down to his target of 2.5 per cent.
Some unkind people might observe that that had a great deal more to do with the downturn in the world economy and the strong pound leading to cheaper imports than anything that the Chancellor has done, but let us be generous and concede that the Chancellor has achieved the goal of getting inflation down to the level that he inherited. In the last month of the previous Parliament, we achieved our inflation target of 2.5 per cent. or less. Inflation then went up under the new Government, and the Chancellor has now at last got it back down to our level.
If that is such a triumph for the Chancellor's management of the economy, why does he not take similar responsibility for everything that has gone wrong? At that point he falters, and suddenly the problems have nothing to do with him, but are all the fault of the global slowdown. As many of my hon. Friends have pointed out, that does not explain why the slowdown in the global economy has affected this country almost uniquely. We are by far the worst affected, except for Japan, where different considerations apply.
The reason is not a mystery. It is a result of the policy errors of two Budgets over the past 17 months. There were 17 tax rises in the first Budget. There has been an ill-judged attack on savings, too. The two most successful savings vehicles of all time—TESSAs and PEPs—were

abolished and supposedly replaced by the wholly untried individual savings accounts, details of which are still unclear. There was the notorious £5 billion-a-year raid on pension funds. At the same time, the Chancellor was exhorting everyone to save more. That was exactly what the British economy did not want. That is why we are facing a downturn and a drop in growth that is far worse than any of our continental and overseas competitors— bar Japan.

Mr. Caplin: Will the right hon. Gentleman give way on that point?

Mr. Heathcoat-Amory: I will not; I have several other points to make in answering those already made.
My hon. Friend the Member for West Worcestershire (Sir M. Spicer) pointed out the mismatch between Treasury policies on taxation and expenditure, and Bank of England monetary policies, which are pulling in the opposite direction. To try to compensate for policy errors, the wretched Monetary Policy Committee has had to set interest rates way above what was otherwise required. That has helped to drive the economy to the brink of recession.
The Government's fourth policy error is the huge extra regulatory burden that has been dropped on British industry. The Chancellor has suddenly discovered a productivity gap—he mentioned it again in his speech earlier—yet he has done more than anyone to widen it. He tried to widen it when he was in opposition, by voting day after day, year after year, with all his hon. Friends, against all the trade union reforms, industrial reforms and privatisation measures that transformed the productive potential and productivity of the British economy.
Now that he is in office, the right hon. Gentleman is widening the productivity gap by imposing a £39 billion burden on business in this Parliament through extra taxes and extra business regulation. All those figures are from the Government. Departments have calculated in compliance-cost assessments the additional burden on British business men who face international competition.
Businesses do not want fantasy economics or lectures about their lack of productivity from the Chancellor; they want the measures to be reversed. They do not want gimmicky trivia about what the Government may do to tackle the problem in consultation in the years ahead; they want to be relieved of the £39 billion burden of extra regulation. They do not want another energy tax that is dreamed up by a consultative committee on the environment, consultation about a new banking committee, or another inquiry into the venture capital industry. They are not interested in the drawing up of what the Chancellor calls public service agreements— especially because they know that, for this Government, consultation means the Government talking to representatives of a few big businesses in London and totally ignoring the real concerns and requirements of business men in our constituencies.
Nor do business men like the misleading way in which the Chancellor pretended in his speech that employers will not pay national insurance contributions on earnings below £83 a week. Incidentally, that is a recycled policy. The Chancellor did not tell the other side of the story: businesses' national insurance contributions will rise in April from 10 to 12.2 per cent. That is the bad news; that


is what will cost jobs. The Chancellor is entirely silent on that. That is why businesses do not trust the Government. They are not a business-friendly Government, because they speak only in half-truths.
The Chancellor is paying the price of 17 months and two Budgets of policy mistakes and financial blunders. The tragedy is that the rest of the country—businesses, savers and unemployed people—will shortly be paying the price. In winding up, will the Economic Secretary confirm that, even at this late stage, the Government will, in all modesty, propose a package of reforms to restore and revive the economy, rather than simply presiding over its decline?

The Economic Secretary to the Treasury (Ms Patricia Hewitt): This debate on the economy was called by the Conservatives, and how revealing it has been. It certainly revealed in the first half hour that the Conservative party will shortly have to find another shadow Chancellor.
The Conservatives have made it very clear today that they are saying no to Bank of England independence, no to £40 billion extra spending on health and education, no to the minimum wage, no to the new deal for unemployed people, no to the working families tax credit, which will make work pay, no to parental leave, no to fair standards for working people, and no to the single currency—even if it is best for British people and their jobs. Most revealingly, we heard from the shadow Chancellor that the Conservatives are even saying no to protecting the basic pension against inflation.

Mr. Maude: The hon. Lady knows perfectly well that that is untrue. Our position remains exactly the same; we remain committed to the basic state pension, as we always have been. Are the Government committed to maintaining the basic state pension without means testing—yes or no?

Ms Hewitt: We made plain in the manifesto our commitment to the basic state pension as the foundation for security in old age. The right hon. Gentleman has refused to say, just as he did in his opening speech, whether the Conservative party is still committed—as we are—to raising the basic state pension in line with inflation.

Mr. Maude: rose—

Hon. Members: Give way.

Ms Hewitt: No, the right hon. Gentleman will not answer the question.

Mr. Maude: On a point of order, Mr. Deputy Speaker. The Economic Secretary has directly misquoted me, and is refusing to give way in order to allow me to set the record straight.

Mr. Deputy Speaker (Mr. Michael Lord): Whether hon. Members give way is entirely a matter for them.

Ms Hewitt: rose—

Mr. Maude: Will the hon. Lady give way?

Ms Hewitt: indicated assent.

Mr. Maude: I should make it clear, in case the hon. Lady does not understand, that our commitment to the basic state pension and to raising it in line with inflation remains exactly as it always has been. She knows that perfectly well. Is her party committed to maintaining the basic state pension without means testing?

Ms Hewitt: It was in our manifesto, as I said, and as the right hon. Gentleman knows. I am delighted that, after giving the shadow Chancellor three opportunities to answer during his opening speech, we have finally heard a reply on the question of inflation.

Mr. Quentin Davics: rose—

Mr. Deputy Speaker: Order. The hon. Lady is clearly not giving way at the moment.

Ms Hewitt: The next question for the Conservative party is where it would cut public spending. It is against our public spending.

Mr. Davies: rose—

Mr. Deputy Speaker: Order. I have just told the hon. Gentleman that the Economic Secretary has no intention of giving way at the moment. He should therefore resume his seat.

Ms Hewitt: Thank you, Mr. Deputy Speaker.
The Conservative party has now said that it would not wish to cut public spending by breaking the link between pensions and prices. I welcome that, but the shadow Chancellor has said that our public spending commitments on health and education are madness, and one of his colleagues described them as profligate.
Where would the Conservatives cut public spending? They have revealed this evening that they are against the additional public spending on health and education. The Conservative party is saying no to British business and no to the British people; no wonder British business and the British people are saying no to the Conservative party.
Then we heard from the hon. Member for Gordon (Mr. Bruce). What a difference there was between his constructive opposition and the shambles of the official Opposition. The hon. Member for Gordon, like the Chancellor and all my other right hon. and hon. Friends, supports the British economy, and will not talk it down as so many hon. Members have done this afternoon.
The hon. Gentleman asked a specific question about the excellent report by Lord Marshall, a former president of the Confederation of British Industry, about business use of energy—the report that has just been denounced by the Conservatives. The question for the hon. Member for Gordon is whether he is in favour of an immediate energy tax on business or whether, like us, he thinks it sensible to consult on the complex technical issues that Marshall raises, before we make a final decision on the recommendations of that interesting and helpful report.

Mr. Edward Davey: Are the Government in favour of an energy tax in principle?

Ms Hewitt: As the Chancellor said yesterday, we welcome the Marshall report. It is a constructive contribution to the debate, and we want to consult further on the technical and design issues it raises before making any decision on its recommendations.
My hon. Friend the Member for Shipley (Mr. Leslie) made another of his immensely enjoyable and well-informed contributions. They are becoming one of the most entertaining and welcome features of the economic debates in the House. I welcome the fact that he explained that it is the Conservative party that is talking down the British economy.

Mr. Lansley: As the Minister is keen on the Labour manifesto, will she explain why it said
An explicit objective of a Labour government will be to raise the trend rate of growth"?
All that has happened since the election is that the Government have reduced their estimate of the trend rate of growth, and they are now predicting that they will consistently under-perform it in this Parliament.

Ms Hewitt: I hope that the hon. Gentleman will therefore support the measures that we are taking to raise productivity in the British economy and put the macro-economic framework and public finances on to a sound basis. That is how we will raise long-term growth.
The hon. Member for West Worcestershire (Sir M. Spicer) complained about the Chancellor's revised economic forecasts. Perhaps I should remind him that the International Monetary Fund forecasts 1.2 per cent. growth for the United Kingdom economy next year, the European Commission forecasts 1.3 per cent. growth next year and 2.1 per cent. growth for 2000, and the National Institute of Economic and Social Research forecasts 1.1 per cent. growth next year, 2.2 per cent. for 2000 and 2.6 per cent. for 2001.
The Government's forecasts announced yesterday are revised, of course, to take account of what is going on in the world economy.

Mr. Nick St. Aubyn: rose—

Hon. Members: He has not been here.

Mr. St. Aubyn: I attended the opening speeches, and I should like the Minister to explain whether she would like the Bank of England tomorrow to concentrate on her Government's great forecasts for next year and deliver only a small cut in interest rates, or to concentrate on the average of the growth forecasts, which are much lower, and deliver a bigger cut in interest rates?

Ms Hewitt: I realise that the hon. Gentleman has not been present for most of the debate, but perhaps he would like to tell us where he stands on independence for the Bank of England. We have given the Bank of England the responsibility to take the tough decisions that are needed to keep inflation under control, and we will back it in the decisions it makes.
To return to the hon. Member for West Worcestershire, what he did not tell the House is that, since the general election, there has been a 15 per cent. drop in unemployment in his constituency. We all welcome that, and I hope that he does too.
My hon. Friend the Member for Croydon, Central (Mr. Davies)—

Sir Michael Spicer: Will the Minister give way?

Ms Hewitt: No.
My hon. Friend made a thoughtful and well-informed speech, in which he rightly paid tribute to the Chancellor for his work and his role in bringing together the G7 countries in agreement on the steps urgently needed to stabilise the world economy. What a pity that neither on Monday nor this evening could the Conservatives bring themselves to welcome that statement, which was agreed with Governments of the right as well as of the left and centre. They lack the generosity to congratulate my right hon. Friend on his work in bringing that about.
The hon. Member for East Yorkshire (Mr. Townend) talked about rural motoring—an extremely important issue. However, he did not tell us that, as the Chancellor announced in the Budget, the Government are putting £50 million into rural transport funding, are freezing vehicle excise duty, and will cut that duty by £50 for the least polluting cars. He also failed to tell the House that there has been a 20 per cent. drop in unemployment in his constituency since the election.

Mr. Townend: rose—

Ms Hewitt: I am afraid that I cannot give way; I am conscious of the time. I have taken enough interventions, and I must make progress.
The hon. Member for Cotswold (Mr. Clifton-Brown), in a rather excitable contribution, seemed to suggest, although the shadow Chancellor takes a different line, that he does not want the inflation-proofing of the basic pension that is part of our social security budget for next year.

Mr. Clifton-Brown: rose—

Ms Hewitt: Let me ask the hon. Gentleman one more question first. Does he want to see the minimum income guarantee for pensioners to which we are committed, which we have introduced and which is in the social security budget for next year? Does he want to see the increase in child benefit that is also in the social security budget for next year?

Mr. Clifton-Brown: Will the Minister now tell the House clearly whether her party is committed to means-testing the basic state pension, and whether she intends to tax child benefit?

Ms Hewitt: It is high time that the hon. Gentleman and his colleagues read our manifesto; we made the position absolutely clear.

Mr. Quentin Davies: Will the Minister give way?

Ms Hewitt: No; I have answered the question.

Mr. Gerald Howarth: On a point of order, Mr. Deputy Speaker. I do not know whether you are aware of the fact, but the hon. Lady does not appear to be in command of her brief. Every time one of my hon. Friends puts a question to her, she merely repeats the answer already given by the Chancellor of the Exchequer. Is it proper that she—

Mr. Deputy Speaker: Order. That is clearly not a matter for the Chair.

Ms Hewitt: I am afraid, Mr. Deputy Speaker, that it is the Conservative party that is not in command of itself in the House.
Of course, the hon. Member for Cotswold failed to mention that unemployment in his constituency has fallen by 29 per cent. since the general election.

Mr. Clifton-Brown: rose—

Ms Hewitt: No.
The hon. Member for Kingston and Surbiton (Mr. Davey)—

Mr. Kenneth Clarke: The hon. Lady, rightly, keeps mentioning the fact that unemployment has fallen in all those constituencies. We all welcome that, but she sounds as if the Government are taking the credit for it. They inherited a situation in which unemployment had been falling for years, but since her Government have been in power, the rate at which it has been falling has been slowing all the time. The reason for the debate is that unemployment will go up next year—sharply in the north and the midlands, and probably in my hon. Friends' southern seats as well. Does she intend to say a word about monetary or fiscal policy to explain why the Government's policies have produced a reverse in this country's jobs market?

Ms Hewitt: Not even the right hon. and learned Gentleman can rescue the Conservative party—there are 400,000 more people in employment since the general election, and more people in employment than ever before. We have tackled the inflationary pressures, and cut the £28 billion deficit which we inherited from the previous Government, we have reduced unemployment, and we are now tackling the productivity gap. We have made the tough decisions needed to end the boom and bust of the Conservative years and to achieve the macro-economic framework, the sound public finances and the investment in good public services that will enable the United Kingdom to steer the course of stability that we want and need in an increasingly unstable world.
I regret that the official Opposition are unable to recognise the mistakes they made, and unable to acknowledge the steps that we have taken. I commend our amendment to the House.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 135, Noes 303.

Division No. 369]
[7 pm


AYES


Ainsworth, Peter (E Surrey)
King, Rt Hon Tom (Bridgwater)


Amess, David
Kirkbride, Miss Julie


Ancram, Rt Hon Michael
Laing, Mrs Eleanor


Arbuthnot, Rt Hon James
Lait, Mrs Jacqui


Atkinson, Peter (Hexham)
Lansley, Andrew


Bercow, John
Letwin, Oliver


Beresford, Sir Paul
Lewis, Dr Julian (New Forest E)


Blunt, Crispin
Lidington, David


Body, Sir Richard
Lilley, Rt Hon Peter


Bottomley, Peter (Worthing W)
Lloyd, Rt Hon Sir Peter (Fareham)


Bottomley, Rt Hon Mrs Virginia
Loughton, Tim


Brady, Graham
Luff, Peter


Brazier, Julian
MacGregor, Rt Hon John


Brooke, Rt Hon Peter
MacKay, Rt Hon Andrew


Browning, Mrs Angela
Maclean, Rt Hon David


Bruce, Ian (S Dorset)
McLoughlin, Patrick


Burns, Simon
Madel, Sir David


Butterfill, John
Major, Rt Hon John


Cash, William
Malins, Humfrey


Chapman, Sir Sydney (Chipping Barnet)
Maples, John



Mates, Michael


Chope, Christopher
Maude, Rt Hon Francis


Clappison, James
Mawhinney, Rt Hon Sir Brian


Clark, Dr Michael (Rayleigh)
May, Mrs Theresa


Clarke, Rt Hon Kenneth (Rushcliffe)
Moss, Malcolm



Nicholls, Patrick


Clifton-Brown, Geoffrey
Norman, Archie


Collins, Tim
Ottaway, Richard


Colvin, Michael
Page, Richard


Cormack, Sir Patrick
Paice, James


Cran, James
Paterson, Owen


Davies, Quentin (Grantham)
Pickles, Eric


Davis, Rt Hon David (Haltemprice)
Prior, David


Duncan, Alan
Randall, John


Duncan Smith, Iain
Robathan, Andrew


Emery, Rt Hon Sir Peter
Robertson, Laurence (Tewk'b'ry)


Evans, Nigel
Roe, Mrs Marion (Broxbourne)


Faber, David
Ruffley, David


Fabricant, Michael
St Aubyn, Nick


Forth, Rt Hon Eric
Sayeed, Jonathan


Fowler, Rt Hon Sir Norman
Shephard, Rt Hon Mrs Gillian


Fox, Dr Liam
Simpson, Keith (Mid-Norfolk)


Fraser, Christopher
Soames, Nicholas


Gale, Roger
Spelman, Mrs Caroline


Garnier, Edward
Spicer, Sir Michael


Gibb, Nick
Spring, Richard


Gill, Christopher
Stanley, Rt Hon Sir John


Gillan, Mrs Cheryl
Steen, Anthony


Goodlad, Rt Hon Sir Alastair
Swayne, Desmond


Gorman, Mrs Teresa
Syms, Robert


Gray, James
Tapsell, Sir Peter


Green, Damian
Taylor, John M (Solihull)


Greenway, John
Taylor, Sir Teddy


Grieve, Dominic
Townend, John


Gummer, Rt Hon John
Tredinnick, David


Hague, Rt Hon William
Trend, Michael


Hamilton, Rt Hon Sir Archie
Tyrie, Andrew


Hammond, Philip
Whitney, Sir Raymond


Hawkins, Nick
Whittingdale, John


Hayes, John
Widdecombe, Rt Hon Miss Ann


Heald, Oliver
Wilkinson, John


Heathcoat-Amory, Rt Hon David
Willetts, David


Horam, John
Winterton, Mrs Ann (Congleton)


Howarth, Gerald (Aldershot)
Winterton, Nicholas (Macclesfield)


Hunter, Andrew
Woodward, Shaun


Jack, Rt Hon Michael
Yeo, Tim


Jackson, Robert (Wantage)
Young, Rt Hon Sir George


Jenkin, Bernard



Johnson Smith, Rt Hon Sir Geoffrey 
Tellers for the Ayes:



Mr. Stephen Day and


Key, Robert
Mr. Nigel Waterson.






NOES


Abbott, Ms Diane
Davey, Valerie (Bristol W)


Ainger, Nick
Davidson, Ian


Ainsworth, Robert (Cov'try NE)
Davies, Rt Hon Denzil (Llanelli)


Alexander, Douglas
Davies, Geraint (Croydon C)


Allen, Graham
Dawson, Hilton


Anderson, Donald (Swansea E)
Dean, Mrs Janet


Anderson, Janet (Rossendale)
Denham, John


Armstrong, Ms Hilary
Dismore, Andrew


Ashton, Joe
Dobbin, Jim


Atkins, Charlotte
Dobson, Rt Hon Frank


Barnes, Harry
Donohoe, Brian H


Barron, Kevin
Dowd, Jim


Battle, John
Drew, David


Bayley, Hugh
Drown, Ms Julia


Beard, Nigel
Eagle, Angela (Wallasey)


Beckett, Rt Hon Mrs Margaret
Eagle, Maria (L'pool Garston)


Bell, Martin (Tatton)
Edwards, Huw


Bell, Stuart (Middlesbrough)
Efford, Clive


Benn, Rt Hon Tony
Ellman, Mrs Louise


Bennett, Andrew F
Ennis, Jeff


Bermingham, Gerald
Field, Rt Hon Frank


Berry, Roger
Fisher, Mark


Best, Harold
Fitzsimons, Lorna


Betts, Clive
Flynn, Paul


Blair, Rt Hon Tony
Foster, Michael J (Worcester)


Blears, Ms Hazel
Galbraith, Sam


Borrow, David
Galloway, George


Bradley, Keith (Withington)
Gardiner, Barry


Bradley, Peter (The Wrekin)
Gerrard, Neil


Bradshaw, Ben
Gibson, Dr Ian


Brown, Rt Hon Gordon (Dunfermline E)
Godman, Dr Norman A



Godsiff, Roger


Brown, Rt Hon Nick (Newcastle E)
Goggins, Paul


Browne, Desmond
Golding, Mrs Llin


Buck, Ms Karen
Gordon, Mrs Eileen


Burden, Richard
Griffiths, Jane (Reading E)


Burgon, Colin
Griffiths, Nigel (Edinburgh S)


Butler, Mrs Christine
Griffiths, Win (Bridgend)


Byers, Rt Hon Stephen
Grocott, Bruce


Campbell, Alan (Tynemouth)
Grogan, John


Campbell, Mrs Anne (C'bridge)
Gunnell, John


Campbell, Ronnie (Blyth V)
Hall, Mike (Weaver Vale)


Campbell-Savours, Dale
Hall, Patrick (Bedford)


Cann, Jamie
Hamilton, Fabian (Leeds NE)


Caplin, Ivor
Hanson, David


Caton, Martin
Harman, Rt Hon Ms Harriet


Cawsey, Ian
Heal, Mrs Sylvia


Chapman, Ben (Wirral S)
Henderson, Ivan (Harwich)


Chaytor, David
Heppell, John


Clapham, Michael
Hesford, Stephen


Clark, Rt Hon Dr David (S Shields)
Hewitt, Ms Patricia


Clark, Dr Lynda (Edinburgh Pentlands)
Hinchliffe, David



Hodge, Ms Margaret


Clarke, Charles (Norwich S)
Home Robertson, John


Clarke, Eric (Midlothian)
Hoon, Geoffrey


Clarke, Rt Hon Tom (Coatbridge)
Hopkins, Kelvin


Clelland, David
Howarth, George (Knowsley N)


Coaker, Vernon
Howells, Dr Kim


Coffey, Ms Ann
Hoyle, Lindsay


Cohen, Harry
Hughes, Ms Beverley (Stretford)


Coleman, Iain
Hughes, Kevin (Doncaster N)


Connarty, Michael
Humble, Mrs Joan


Cook, Frank (Stockton N)
Hurst, Alan


Cooper, Yvette
Hutton, John


Corbett, Robin
Iddon, Dr Brian


Corbyn, Jeremy
Jackson, Ms Glenda (Hampstead)


Cousins, Jim
Jackson, Helen (Hillsborough)


Crausby, David
Jenkins, Brian


Cryer, Mrs Ann (Keighley)
Johnson, Miss Melanie (Welwyn Hatfield)


Cryer, John (Hornchurch)



Cummings, John
Jones, Mrs Fiona (Newark)


Cunningham, Jim (Cov'try S)
Jones, leuan Wyn (Ynys Môn)


Curtis-Thomas, Mrs Claire
Jones, Ms Jenny (Wolverh'ton SW)


Darling, Rt Hon Alistair



Darvill, Keith
Jones, Jon Owen (Cardiff C)





Jones, Dr Lynne (Selly Oak)
Pound, Stephen


Jones, Martyn (Clwyd S)
Powell, Sir Raymond


Kaufman, Rt Hon Gerald
Prentice, Ms Bridget (Lewisham E)


Keeble, Ms Sally
Prentice, Gordon (Pendle)


Keen, Alan (Feltham & Heston)
Prosser, Gwyn


Keen, Ann (Brentford & Isleworth)
Purchase, Ken


Kelly, Ms Ruth
Quin, Ms Joyce


Kemp, Fraser
Radice, Giles


Kennedy, Jane (Wavertree)
Rapson, Syd


Kidney, David
Reid, Rt Hon Dr John (Hamilton N)


Kilfoyle, Peter
Robertson, Rt Hon George (Hamilton S)


King, Andy (Rugby & Kenilworth)



Kumar, Dr Ashok
Robinson, Geoffrey (Cov'try NW)


Ladyman, Dr Stephen
Rogers, Allan


Lepper, David
Rooker, Jeff


Leslie, Christopher
Rooney, Terry


Levitt, Tom
Ross, Ernie (Dundee W)


Lewis, Ivan (Bury S)
Rowlands, Ted


Linton, Martin
Roy, Frank


Livingstone, Ken
Ruddock, Ms Joan


Lloyd, Tony (Manchester C)
Ryan, Ms Joan


Lock, David
Salter, Martin


Love, Andrew
Sarwar, Mohammad


McAvoy, Thomas
Savidge, Malcolm


McCabe, Steve
Sawford, Phil


McCafferty, Ms Chris
Sedgemore, Brian


Macdonald, Calum
Shaw, Jonathan


McDonnell, John
Sheerman, Barry


McFall, John
Sheldon, Rt Hon Robert


McGuire, Mrs Anne
Shipley, Ms Debra


McIsaac, Shona
Short, Rt Hon Clare


Mackinlay, Andrew
Simpson, Alan (Nottingham S)


McNulty, Tony



Mactaggart, Fiona
Singh, Marsha


McWalter, Tony
Skinner, Dennis


McWilliam, John
Smith, Rt Hon Andrew (Oxford E)


Mahon, Mrs Alice
Smith, Rt Hon Chris (Islington S)


Mandelson, Rt Hon Peter
Smith, Miss Geraldine (Morecambe & Lunesdale)


Marsden, Gordon (Blackpool S)



Marsden, Paul (Shrewsbury)
Smith, John (Glamorgan)


Marshall, David (Shettleston)
Smith, Llew (Blaenau Gwent)


Marshall-Andrews, Robert
Soley, Clive


Martlew, Eric
Southworth, Ms Helen


Maxton, John
Spellar, John


Meacher, Rt Hon Michael
Squire, Ms Rachel


Meale, Alan
Starkey, Dr Phyllis


Merron, Gillian
Steinberg, Gerry


Michael, Alun
Stevenson, George


Michie, Bill (Shef'ld Heeley)
Stewart, Ian (Eccles)


Miller, Andrew
Stoate, Dr Howard


Mitchell, Austin
Strang, Rt Hon Dr Gavin


Moffatt, Laura
Straw, Rt Hon Jack


Moonie, Dr Lewis
Stringer, Graham


Moran, Ms Margaret
Stuart, Ms Gisela


Morgan, Ms Julie (Cardiff N)
Sutcliffe, Gerry


Morgan, Rhodri (Cardiff W)
Taylor, Rt Hon Mrs Ann (Dewsbury)


Morris, Ms Estelle (B'ham Yardley)



Mowlam, Rt Hon Marjorie
Taylor, Ms Dari (Stockton S)


Mudie, George
Taylor, David (NW Leics)


Mullin, Chris
Temple-Morris, Peter


Murphy, Denis (Wansbeck)
Thomas, Gareth (Clwyd W)


Murphy, Jim (Eastwood)
Timms, Stephen


Naysmith, Dr Doug
Tipping, Paddy


Olner, Bill
Todd, Mark


O'Neill, Martin
Trickett, Jon


Organ, Mrs Diana
Truswell, Paul


Osborne, Ms Sandra
Turner, Dennis (Wolverh'ton SE)


Palmer, Dr Nick
Turner, Dr Desmond (Kemptown)


Pearson, Ian
Turner, Dr George (NW Norfolk)


Pendry, Tom
Twigg, Derek (Halton)


Pickthall, Colin
Twigg, Stephen (Enfield)


Pike, Peter L
Vaz, Keith


Plaskitt, James
Vis, Dr Rudi


Pollard, Kerry
Ward, Ms Claire


Pond, Chris
Wareing, Robert N


Pope, Greg
White, Brian






Williams, Rt Hon Alan (Swansea W)
Worthington, Tony



Wright, Anthony D (Gt Yarmouth)


Williams, Alan W (E Carmarthen)
Wright, Dr Tony (Cannock)


Wills, Michael



Winnick, David
Tellers for the Noes:


Wise, Audrey
Mr. David Jamieson and


Wood, Mike
Mr. Keith Hill.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House notes that the Government inherited an economy set to repeat the same cycle of boom and bust seen over the past 20 years, that inflation was heading way above target because of the previous Government's failure to accept the Bank of England's advice and the public finances were in large structural deficit; recalls that under the previous Government inflation rose to 10 per cent. interest rates remained in double figures for four years and one million manufacturing jobs were lost, while net borrowing increased to £50 billion and the national debt doubled in just four years; notes that the previous Government's policies increased inequality and failed to tackle the structural weaknesses in the economy; commends this Government for its decisive action to build a stable economy, introducing a new framework for monetary policy under which inflation is now at target and set to remain there and interest rates are less than half their previous peak, reducing government borrowing by £20 billion last year and, because of prudent management of the public finances, remaining on track to meet its tough fiscal rules and invest an additional £40 billion in education and health, with an extra £250 million for the National Health Service this year, addressing structural weaknesses by tackling unemployment and poverty with the New Deals and tax and benefit reform, supporting British business by cutting corporation tax, doubling public investment to improve Britain's infrastructure and addressing Britain's productivity gap; and notes that there are now 400,000 more people in employment than at the General Election and that Britain is better placed to steer a course of stability in an uncertain and unstable world.

Agriculture

Mr. Deputy Speaker (Mr. Michael Lord): I have selected the amendment in the name of the Prime Minister. I must remind hon. Members that there will be a 10-minute limit on all Back-Bench speeches.

Mr. Tim Yeo: I beg to move,
That this House deplores the failure of the Government to respond to the deepening crisis in agriculture and to secure an end to the beef export ban; applauds the achievements of British farmers in raising animal welfare and environmental standards; recognises that a thriving rural economy depends on a viable agricultural industry and that this can be achieved by giving farmers a chance to compete on equal terms as summarised in the Opposition's call for a Fair Deal for Farmers; calls on the Government to renew or replace the Calf Processing Scheme, restore HLCAs to 1993 levels and take up agri-monetary compensation for the livestock sector financed by the underspends on the agriculture budget; urges action to establish honesty in labelling to help consumers make better informed choices, to encourage the purchase of home grown food by all public sector bodies and cut the burden of excessive regulation; calls for an immediate ban on the sale of food not produced to standards required in Britain; and condemns the hostility consistently displayed by Ministers to the country people in local government finance, transport and planning policy.
First, I must welcome the Minister of Agriculture, Fisheries and Food to the Dispatch Box. We are delighted that he has decided to take part in this debate. After all, it is his first chance to speak in a major agriculture debate since his appointment a little over three months ago.

Mr. Clive Betts (Lord Commissioner to the Treasury): It was the summer recess for most of that time.

Mr. Yeo: That is true, but it is also true that for the past three weeks the House has had to debate in Government time all sorts of non-urgent measures, one of which was inspired by the Ministry of Agriculture, Fisheries and Food on Thursday, on the important but not urgent subject of quarantine. So, this is the Minister's first chance to speak in such a debate and we welcome him to it.
As the right hon. Gentleman knows, in those three months the problems that face farmers have got much worse. Pig farmers have been going bankrupt, sheep farmers have been forced to shoot their flocks, and beef farmers still await an end to the export ban, while dairy farmers and cereal growers are suffering from falling returns. It is no exaggeration to say that the industry is in crisis. At first, the Government seemed inclined to ignore that crisis or even to deny it. Now that they have been forced to admit its existence, they seem confused about what to do. We have called today's debate to give the Minister a chance to end that confusion. Last Thursday, he told the House:
Farmers are looking not for a debate, but for answers."— [Official Report, 29 October 1998; Vol. 318, c. 484.]
If it were left to the Government, they would get neither.

Mr. Geoffrey Clifton-Brown: Does my hon. Friend agree that what we want from the Government is a level playing field for agriculture? Does he also agree that, this year, about £310 million is available under


the agrimonetary compensation scheme? Nine other Governments have applied for it and it is high time that ours did, as that would considerably benefit our farmers.

Mr. Yeo: My hon. Friend is right. Farmers are looking for a level playing field. He will be amazed to hear that I intend to refer to agrimonetary compensation later as it is mentioned in our motion.

Mr. Robert Jackson: A decision is pending which will be important for agriculture, given that it is in crisis—the referral of Milk Marque to the Monopolies and Mergers Commission. Given the condition of the industry and all the uncertainties and difficulties in which it finds itself, does my hon. Friend agree that it would be undesirable for that decision to destabilise that important sector?

Mr. Yeo: My hon. Friend is right. It is important that, where possible, we should strengthen the hand of dairy farmers. It would be damaging if the outcome of the inquiry weakened Milk Marque's position or that of other potential groupings in the dairy industry.
In opposition, we have the power to deliver a debate and we intend to use it this evening to tell the Minister the answers that he should be giving to farmers. Those answers are urgently needed because, this very evening, farmers are agonising over their future and need to make plans for the winter against a background of certainty, not doubt. Let no one underestimate the severity of the problem. As the Country Landowners Association said:
For the first time in a century the depression in prices has extended across all agriculture.
Farmers Weekly has even published a leader warning of the risks of suicide among farmers. In 15 years of representing a farming constituency I cannot remember a bleaker period and right hon. and hon. Friends who have been in the House twice as long tell me that they cannot either. It is not merely farmers who are being destroyed; the entire rural economy has been hit. The fabric of our countryside is threatened—those parts of it which the Deputy Prime Minister has not covered in concrete through his damaging planning decisions.

Mr. Betts: Nonsense.

Mr. Yeo: The Deputy Prime Minister made a statement from the Dispatch Box in February that he would raise the target for the proportion of new homes built on previously developed sites and, since then, he has not allowed one county to revise its structure plan, so it is not nonsense; it is a fact and it is damaging green fields throughout the country. It is helpful of the Labour Whip to make it clear in a sedentary intervention that the Government do not care about the issue.
Today is the Minister's chance to stop the dithering and to show that the warm words that he has been dispensing so freely are backed up by action. We have heard his hints that help is on the way, so let us have the facts. If he has no more to say than the Minister of State said last week, he will provoke fears that, once again, the Ministry of Agriculture, Fisheries and Food has been outgunned by

the Treasury and that the Government's policy on farmers is limited to hoping that the problems will ease if the pound goes down.

Charlotte Atkins: Why did the previous Government never pay agrimonetary compensation to farmers?

Mr. Yeo: If the hon. Lady took the trouble to meet any farmers, she would learn that the current crisis in agriculture is of a wholly different order from anything that was experienced under the Conservative Government.
If the Government's policy on farming is limited to hoping that the pound will go down, the Minister will find that he has more trouble to face. To help him, we set out in the motion what needs to be done. The Government must either renew or replace the calf processing scheme. I warmly welcome reports today of progress towards lifting the ban on beef exports, but, even if the ban is lifted soon, it will take time for British producers to regain their market share. To end the calf scheme without even having a firm date for lifting the ban would be rash, so I urge the Minister to continue such help, at a lower rate if necessary, but certainly for another year.
Hill farming is one of the most vulnerable sections of the industry. The National Farmers Union report, "Protecting Our Upland Heritage", pointed out that two out of three Welsh hill farmers had incomes of less than £190 a week last year. The Fanners Union of Wales predicts that, this year, incomes will fall by more than half. In Wales, many farmers are working for incomes well below the minimum wage. Not surprisingly, among the FUW's priorities is the need for an increase in hill livestock compensatory allowances.
Last week, the Minister of State referred to the Government's intention to consider changes to HLCAs in the context of Agenda 2000. He said that the Government planned to consult on options for a new scheme later this year. That is all very well, but what is happening now? The hill farming review is supposed to take account of current conditions; surely an immediate increase in HLCAs is justified in response to the current crisis. Perhaps the former Secretary of State for Wales let the cat out of the bag when he said that no money was available. Is the review nothing more than a sham?

Mr. Anthony Steen: I am grateful for this opportunity to draw the attention of the House to hill farmers not only in Wales but in Devon and Somerset. Is my hon. Friend aware that the earnings of Dartmoor hill farmers—and we should not forget the lowland farmers— are as low as those of Welsh hill farmers? I hope that he will tell the Minister what he should be doing about that, as the Minister clearly has not got a clue about what he should be doing.

Mr. Yeo: My hon. Friend is absolutely right. Everything I have said about Welsh hill farmers should be understood to apply to the equally urgent needs of hill farmers across the country.

Mr. Hilton Dawson: Why did the previous Government freeze HLCAs in 1992? I suspect that it was not because hill farmers were doing so well; then, as now, they were on the margins of viability. Why the sudden change?

Mr. Yeo: I thought that I had explained that the purpose of the review is to reflect the current situation.


The previous Government took decisions in relation to the situation that faced hill farmers at the time. I am asking this Government to do the same. Given what the former Secretary of State for Wales said, however, we fear that their minds have been made up regardless of hill farmers' needs.
My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) mentioned agrimonetary compensation. Given the crisis in the livestock sector, why have not the Government drawn down the full amount of compensation? I am advised that £48 million is available this year for the livestock sector. Although taking up that money would of course cut Britain's rebate from the European Union, it would still represent good value, as the actual cash help to farmers would considerably exceed the net cost to the taxpayer. If the Minister does not take up that money, will he explain why he wants British farmers to be at a disadvantage to those farmers in other European countries who utilise that help when they are eligible to do so?
On the issues that I have mentioned, let us have no more dithering. Today, let the Minister show that he cares as much as we do about the survival of Britain's farmers.

Mr. Mark Todd: Will the hon. Gentleman return to his shopping list and say what amounts of money he suggests should be set aside in this year's expenditure plans to pay for his proposals?

Mr. Yeo: The hon. Gentleman has obviously read the motion—I am about to come to that very point.
We have tried to make life easy for the Minister— [HON. MEMBERS: "Shame."] We must remember that the Minister is not his predecessor. I admit that that is not a demanding benchmark, but he deserves a fair chance. The motion points out that, this year and last year, there has been an underspend in the agriculture budget. In plain English, that means that the Labour Government decided to spend less on agriculture during their first two years in office than the outgoing Conservative Government would have done if they had been re-elected.

Mr. Shaun Woodward: I am grateful to my hon. Friend for giving way; he has been extremely tolerant in taking a number of interventions, not least from Labour Members, who seem hellbent on referring to the past when they should be focusing on their responsibilities for the present, which are indeed onerous. Of course farmers faced difficulties under the Conservative Government, but those difficulties have now turned into crisis and depression. In my constituency, farmers— especially those in the pig industry—face particularly severe problems. Farm-gate prices have fallen by some 60 per cent. in the past two years. We look forward to hearing the Minister give a response that will, unlike those that he has given in the past, tell pig farmers what short-term help they will receive to prevent even more of them from going bust in the next few months.

Mr. Yeo: My hon. Friend is right. It is no exaggeration to say that agriculture is threatened by depression. He is also right to highlight the problems of pig farmers, which I shall deal with in a moment.
As I was saying, the Government have cut help to farmers—help that they would have received from a Conservative Government—just as the industry is sliding towards depression. The cost of the measures that I have proposed is significantly less than the underspend on the agriculture budget in the past two years.

Mr. Alan W. Williams: Does the shadow Minister recognise that the Government's expenditure on agriculture is greater than that for the whole of the Department of Trade and Industry? There is one reason for that—the Conservative Government's legacy of BSE.

Mr. Yeo: I am not sure whether the hon. Gentleman is saying that the Government are spending too much on agriculture. If so, I have no doubt that the Minister will respond to his point.
In our fair deal for farmers campaign, we have also highlighted non-financial issues, such as the sale of imported food that has been produced under conditions that are not allowed in this country. I believe that many consumers would be shocked if they knew what was happening.
I take the example of pigs. British pig farmers have invested heavily to meet the higher animal welfare standards that the public rightly demand. That has made their costs higher than those of their European competitors. British pigs are no longer reared in stalls or on tethers and they are not fed on meat and bone meal, yet British bacon sits on the counter alongside bacon imported from countries where animal welfare standards are lower and restrictions on feeding are less tight, and consumers remain in the dark.
British pig farmers are suffering from unfair competition, and that situation should stop now.

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): indicated assent.

Mr. Yeo: I am glad that I have carried the Minister on that point.

Mr. Paul Tyler: As I asked the hon. Gentleman this question last week and he has had 10 days to think about it, I hope that he will be able to answer. If it is time for that unfair competition to stop now, why was it not the time for it to be stopped when it started? Under the previous Government, the pig sector was very hard hit by exactly the same problem. I constantly pressed Ministers to do something, but nothing was done. Why not?

Mr. Yeo: I deeply regret giving way to the hon. Gentleman, who made a very childish contribution at business questions last Thursday and who has displayed his extraordinary ignorance of the subject that he is trying to address. The pig sector is going through a major crisis: pig farmers are going bankrupt every week. That situation requires an urgent response and could not be more different from the highly profitable conditions that pig farmers enjoyed under the Conservative Government.

Mr. Keith Simpson: Is my hon. Friend aware that, yesterday morning, my right hon. Friend the


Member for South-West Norfolk (Mrs. Shephard), my hon. Friend the Member for North Norfolk (Mr. Prior) and I attended a meeting in Norwich with a large number of pig farmers who made the point that, although there have been problems in the past, there has never been such a crisis in pig farming? They are not people who complain or whinge, and they are not subsidised—I know that the Minister will agree with that—but they are literally at the end of their tether. They want more than good words and an appearance by Ministers at a pig industry breakfast. They want the Government to take action and not simply to go through the motions of support.

Mr. Yeo: My hon. Friend is absolutely right. His knowledge of and interest in the pig industry contrasts sharply with the ignorance displayed by the hon. Member for North Cornwall (Mr. Tyler). I hope that pig farmers in the west country will be aware of how little he knows about the subject.
A great deal of poultry is being imported from the far east. Avoparcin, a growth promoter which was banned in Europe two years ago, is still widely used in feeding poultry in the far east: another fact which, I suspect, is not widely known by consumers. The Opposition believe that the sale of food produced by methods not allowed here should be halted.
If good British beef can be banned from entering the rest of the European Union, the Government should be able to find a way of stopping the importation of illegal food. They could start by reading article 36 of the treaty of Rome, which is now article 30 of the treaty of Amsterdam, which allows restrictions on imports if they can be justified on the grounds of protecting the health and life of humans and animals. Will the Minister urgently investigate how such items can be prevented from coming into Britain, or does he prefer to let the British public remain in the dark and go on buying food the production of which has involved unlawful methods?
I was delighted by today's news that the supermarkets have agreed to make it clear to consumers which food is grown in Britain and which is merely processed here.

Mrs. Angela Browning: My hon. Friend will recall that, in last Monday's debate, I and my hon. Friend the Member for Teignbridge (Mr. Nicholls) asked why schools in Devon serve Irish rather than British beef. The following day, the chief executive and the Liberal Democrat leader of Devon county council explained to us and, I believe, to the hon. Member for Torridge and West Devon (Mr. Burnett), that no British company wanted the contract.
I did not believe that to be the truth, and I wrote to the council leader immediately asking him to print the names of all those who had tendered for the contract. I have not received the names. I contacted him again today and he told me that he would write to me shortly. Is not that disgraceful from a council led by a party that says that we should support British farmers?

Mr. Yeo: My hon. Friend performed a valuable service for the House, for the voters of Devonshire and for food producers in the western region by exposing the Liberal party's duplicity. I am pleased that she is pursuing the matter and deeply shocked at the failure of the council concerned to give a straight answer to a straight question. The Liberal party has been shown up for what it is, preaching one thing but doing another.
It was unsatisfactory that food could be labelled as British when in fact it was sourced outside this country, and we have been calling for some time for the distinction to be made clear to consumers. I pay tribute to those involved in taking that important step forward and I hope that action will be immediate.
Steps must also be taken in the public sector. Some weeks ago, I wrote to the Home Secretary and to the Secretaries of State for Health, for Education and Employment and for Defence to ask whether they would issue guidance on food purchasing to prisons, hospitals and schools. To date, only one of those four Departments has even replied to my letter. That does not suggest that helping local farmers is a high priority for the Government.
The one Department that replied, the Department for Education and Employment, made it clear that it did not want to issue guidance on the matter, preferring to leave it to the local authorities: hardly encouraging, since most local authorities offer no guidance apart from a consistent hostility towards beef among Labour-controlled councils.

Mr. David Drew: All local authorities work under the competitive tendering regime. Which Government were responsible for introducing that?

Mr. Yeo: There are still ways in which councils could encourage local farmers. Sourcing food locally produces higher quality and better value for money, and I understand that the Government wanted that to be done under their best value programme for local councils.
As we have heard, not only Labour councils are letting down British farmers; the Liberal Democrats are at it as well. I hope that the Minister will accept that the public sector has many opportunities to buy locally produced food. Will he at least find out whether his Cabinet colleagues are willing to give a lead? Does he agree that their failure even to answer my letter after seven weeks suggests that they do not care much about the countryside?
It is just over five weeks since the Meat (Hygiene and Inspection) (Charges) Regulations 1998 came into force. They impose a heavy cost on abattoirs, and especially small ones, which are required to pay for the much more intensive supervision of their work that now takes place. The extra costs are a burden and tend to reduce the prices that they can afford to pay farmers for livestock. Will the Minister find out quickly how those costs are being met in other European Union countries? Does he recognise that the costs may be placing an unfair burden on Britain, putting businesses and farmers here at a disadvantage relative to the rest of the EU?
In our campaign for a fair deal for farmers, we are concerned about the Government's general attitude to the countryside. Farmers are already struggling and the morale of the whole rural community has been further weakened by the Government's hostility. [HON. MEMBERS: "Oh dear."] That was an instructive reaction. Government Back Benchers, some of whom may even claim to represent rural seats, are trying to rubbish this point. Let me remind them that, last year, the Deputy Prime Minister cut by £100 million the cash that was given to rural councils, resulting in fewer services in rural areas. Will that cut be reversed when the cash help—the revenue support grant—for next year is announced in four weeks' time?
Have the Labour Members who are trying to rubbish this point made any representations on behalf of their constituents? Will the Minister tell us whether he has made representations to the Deputy Prime Minister? Does he understand that the matter is important to the rural communities? Will he tell us this evening what he has been doing?
While the Minister is speaking to the Deputy Prime Minister, will he also tell him to drop the threat of a new law for a right to roam? Good progress is being made on increasing access to private land on a voluntary basis. Why will not the Government let that continue, without more threats?
We warmly welcome the progress that is being made towards lifting the beef ban. I wish the Minister well in his efforts to have it lifted at the Agriculture Council meeting later this month. Does he recognise that even if the ban is lifted, it will take some time before the markets are recovered? Will he confirm that the lifting of the ban will be partial, not total, and that it will still not be possible to export beef on the bone, and the export of pedigree cattle—the best of British breeding stock—will still not be able to resume?
When will the Minister see sense and accept our request for a lifting of the ban in Britain on beef on the bone? That ban was introduced by his predecessor last December. It damaged confidence in British beef just when the Government should have been trying to boost it. The ban was not justified then and is not justified now. Even a year ago, one of the options from the Spongiform Encephalopathy Advisory Committee, SEAC, was to publish the research and the risk assessment and to let consumers decide. Will he agree this evening to do that?
Agriculture is in crisis—a crisis that affects the entire rural community. Action is needed now. Any delay by the Minister amounts to fiddling while Rome burns. I have set out three financial measures, which could be paid for out of the underspend on the agricultural budget, and five other steps that would not cost the taxpayer a penny. Farmers in every corner of Britain are waiting for the Minister's reply. The best early Christmas present to them would be for him to accept the Conservative motion, which I commend to the House.

The Minister of Agriculture, Fisheries and Food (Mr. Nick Brown): I thank the hon. Member for South Suffolk (Mr. Yeo) for arranging the debate, and for the welcome that he has again given me to the Dispatch Box.
Leaving to one side all the political rhetoric and knockabout, and dealing just with the ideas that the hon. Gentleman advanced, it is clear that there is not as much between us as those observing these proceedings might think. Many of the ideas that he advanced are perfectly sensible and it is entirely reasonable for him to invite Government to consider them.
Nevertheless, I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
welcomes the Government's strong commitment to the United Kingdom farming industry and to the wider rural economy; recognises that the lifting of the beef export ban in Northern Ireland represents the first crucial step towards lifting the ban from all parts

of the United Kingdom; welcomes the steps which the Government has taken since May 1997 to support the beef and sheep industry via EU agri-monetary compensation and relief from charges; acknowledges the steps taken specifically to help the sheep, pig and cereal sectors with targeted EU measures; and endorses the Government's intention to bring about a secure and viable future for United Kingdom farming by seeking a reformed Common Agricultural Policy, which is more economically rational, which reduces the bureaucratic burden on farmers, which enhances targeted support for the rural economy, which serves the consumer well and which contains fair and common rules to ensure that the United Kingdom's farming and food industries can exploit their competitive advantages in European and world markets." [Interruption.]
I see that Opposition Members are disappointed—they thought that I would simply accept the motion and we could all go home. Unfortunately, that is not possible. As they have arranged for the debate and taken the trouble to get me to the Dispatch Box, the least that I can do is to respond to the hon. Gentleman.
I acknowledge that agriculture is going through difficult times, and that the times are hardest for hill farmers and those more generally in the livestock sector. I acknowledge that times are difficult also for others in agriculture. There are a range of reasons for this, some sector-specific and some general. In some sectors, supply is out of balance with demand, not just in the United Kingdom, but in western Europe.
Against that background, I freely acknowledge that the terms of trade in the recent past have been difficult for British farmers. The collapse of important export markets in Russia and the far east has exacerbated the problem, as has the ban on the export of British beef, which has not only made life difficult for farmers, but led to loss of important markets. Over-optimistic assumptions about the scale of future demand were made in some farm sectors.
The industry's problems are exacerbated because all those factors, each of which would cause problems on its own, have come at the same time. Agricultural production is a cyclical industry. Its current difficulties are heightened because most sectors of the industry are suffering a downturn simultaneously.

Mr. Woodward: Will the right hon. Gentleman acknowledge that farming is in recession? If so, does he propose to take immediate action to help farmers out of the recession?

Mr. Brown: I do not want to engage in a semantic debate about crisis, recession or difficulties. That would not help. If I were a farmer who was making an assessment about how to get through the present problems, and looking hard at what the Government could do to help, but acknowledging that ultimately I had to make my way in the marketplace, I would not want to go to see my bank manager, if I were asking for my loan facility to be extended, and hear the bank manager say that the Minister had just confirmed that farmers were going through a crisis.
One must respond proportionately and accept that the ultimate decisions will be made by individuals who are quite capable of taking charge of their own affairs in the marketplace. Government have a responsibility to be candid about the shape of the marketplace. That is


particularly important in the agricultural sector, because the parameters are set to some extent artificially by the workings of the common agricultural policy.

Several hon. Members: rose—

Mr. Brown: I shall work round the Chamber, if that is acceptable to the House.

Sir Robert Smith: Does the Minister recognise that if a farmer goes to his bank manager and presents his books, the bank manager is likely to foreclose on the farmer unless he is aware that there is a general crisis. From my conversations with bank managers, it seems that their head offices are being helpful and telling bank managers that a 50 per cent. drop in the books is not unique to a particular farmer and represents not a failure on the part of that farmer, but the crisis facing the industry. It is important for farmers that bank managers understand that—

Mr. Brown: I have got the point. The banks follow these matters closely, for obvious reasons—it is their money that they are lending. I do not want to make matters worse for farmers through the use of inappropriate language. I want to deal with the situation in its proper terms and to advance remedies.

Mr. Robert Jackson: Does the Minister agree that one of the things that farmers can do to help themselves is to co-operate? Will he bear in mind the importance of agricultural co-operation when the Monopolies and Mergers Commission reference comes to him?

Mr. Brown: That is an important point. I hope that the hon. Gentleman will forgive me if I do not say too much specifically about Milk Marque, as it would not be proper for me to do so in the current circumstances. More generally, the hon. Gentleman's point is right. In my meetings with farmers, I have been urging them to come together collectively to make sure that the producer side can make a unified response to others in the marketplace who seem more powerful than they are, particularly the big retailers.

Mr. Cynog Dafis: The Minister speaks of markets and of redressing the balance of power. During Welsh questions this afternoon, I raised a related matter. It is alleged that in abattoirs, of which a large share is owned by supermarkets, the grading of cattle is being carried out not always on the basis of objective criteria, but on the basis of the purchasing requirements of supermarkets at a particular time on a particular day, and that Meat and Livestock Commission officers doing the work of grading are obliged to participate in that. Is that not wrong? Does it not show that supermarkets are acquiring inordinate power in the abattoir system and the marketplace generally? Should not the Minister examine the matter carefully and always—

Mr. Deputy Speaker: Order. Before the Minister answers that question, I remind the House that Madam Speaker has put a limit of 10 minutes on Back-Bench speeches because this is a short debate. Interventions, especially long interventions, only take more time out of it.

Mr. Brown: I am not sure that hon. Members are not taking their 10 minutes out of my time as I slowly work

my way round the Chamber. I shall make sure that the hon. Gentleman gets a full written response to his question, as I want to consult officials. On supermarket criteria generally, he is right. The supermarkets do lay down exacting standards, which they expect to be met. If he is suggesting that that is being done improperly, I do not believe that to be so, but I will check with officials and if it is so, it will be prevented. I want the marketplace to operate in a fair and transparent way. I shall take two more interventions, then I must make progress.

Mr. John Hayes: I am grateful to the right hon. Gentleman for giving way so generously. He has mentioned the marketplace four times in one sentence, rather as if he were a cross between Hayek and Milton Friedman. Does he understand that the marketplace in agriculture is imperfect? Our farmers want the right to compete on a level playing field, and there is no use his telling them to compete in a free market if no one else works to the same rules. They want the right sort of Government support so that they can compete effectively against foreign farmers.

Mr. Brown: I am afraid that the hon. Gentleman is preaching to the converted. As I have said already, the marketplace in agriculture is particularly distorted because of both the peculiar common agricultural policy regime and the actions that national Governments must take to fit that regime to current circumstances. Sometimes, those actions make matters worse rather than better. I follow the strand of the hon. Gentleman's thought, and I can assure him that I will do all I can to get sensible reform of the CAP. I hope that the World Trade Organisation round will bring further progress, and that enlargement of the European Union as we embrace the countries of the east will provide another liberalising element. In any event, world trade is liberalising, and there is no good reason why agriculture should be left out. I give way at last to the hon. Member for Billericay (Mrs. Gorman).

Mrs. Teresa Gorman: I am grateful to the right hon. Gentleman for saving the best until last. He has talked about bank managers and farmers' financial problems. He has also commented on the basic causes of those problems. What would he say to my pig and poultry farmers who tell me that the value of the pound means that their products are less competitive than imported products, which are more attractive to shopkeepers? The cost of their overdrafts is also dictated by the Government's financial policies. What would the right hon. Gentleman urge the Chancellor to do about that?

Mr. Brown: I would not urge him to devalue the currency artificially, any more than I would urge him artificially to overvalue it. It is odd that the debate is being conducted this way round with Labour Members defending market assessments of the currency's value while Conservatives urge that we both disregard the fact that currency is a store of value and devalue it so that it can have a particular impact on one sector of the economy. I have acknowledged that the terms of trade have not helped agriculture in recent times, but those terms fluctuate, and that is at least part of the cause of the economic cycle in the industry. I cannot extrapolate from


a specific problem a general policy on exchange rates. That would not be sensible, and the previous Government did not do it either.

Mr. Ben Bradshaw: Does my right hon. Friend find it puzzling that while farmers representatives in the National Farmers Union and the Country Landowners Association share the Government's policy of joining the euro as soon as it is in our economic interests to do so, the Conservative party, which claims to be the farmer's friend, has ruled out joining for 10 years?

Mr. Brown: I do not find that puzzling. Some hon. Members may not know that in 1990 the current Leader of the Opposition also shared our policy. It seems that those who have brought their minds to bear on the matter see some merits in our policy.
Having taken a fair tranche of interventions, I shall return to my prepared response to the motion. I am willing to respond, but, before doing so, I was willing to listen, not just to my professional advisers and to farmers' representatives, with whom it is proper that I discuss these matters. I made an enormous effort to meet farmers themselves, and to ask them what they think the Government should do. They, of course, have told me. My approach to the current situation will be based on the representations made to me by farmers themselves.
Strategically I have three tasks: responding to the present situation; engaging farmers in the Agenda 2000 CAP reform package; and carrying the whole sector—farmers, retailers and middlemen alike—together through the changes and restructuring currently taking place, including the challenges presented by a new round of negotiations in the WTO and by EU enlargement, to move us into the more liberal agricultural markets of the next millennium.
Let me say something more about the present situation. The Government have already taken a series of steps to help UK agriculture. My predecessor paid £85 million in agrimonetary compensation to UK suckler cow and sheep producers early in 1998. He ensured that the Government met the costs in 1998–99 of Meat Hygiene Service enforcement of controls on specified risk material from cattle and sheep, which had a value to the industry of £35 million. He ensured that the Government met the start-up and first year running costs of the new cattle tracing system, which had a value to the industry—beef and dairy producers alike—of a further £35 million. Traceability is here to stay. It is fundamental to the operation of a modern industry and the Government cannot and will not go back from it.

Mr. Tyler: Is not it a little perverse to suggest that those sums were in some way to the benefit of the industry when they were in fact compensation for the incompetence of the previous Government? Those were not hand outs to the industry, but compensation for the damage done to it. Will the Minister comment on the information being put before the Phillips inquiry into BSE by civil servants and former civil servants? That makes it quite clear that former Ministers connived with deception as to what should and should not be put into

the public domain, and that they were extremely complacent about the consequences of doing so. Will the Minister ensure that the inquiry hears evidence—

Sir Patrick Cormack: On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Gentleman to anticipate a public inquiry that has not yet reached any conclusion?

Mr. Deputy Speaker: I think that the hon. Gentleman was referring to evidence that might be before the inquiry rather than anything else.

Mr. Brown: The inquiry will report to me and to the Secretary of State for Health. I do not want to say anything to jeopardise it or pre-empt it.
On the narrower point made by the hon. Member for North Cornwall (Mr. Tyler) about industry charges, I am not sure that I agree. The charges were necessary for the industry. Traceability is certainly necessary if the industry is to operate in a modern environment. Our major trading partners, including those whose markets we are trying to get back into, would look askance if we had no competent traceability scheme in place. I opened the British cattle traceability scheme formally at Workington last Friday, although it has been running for a few weeks. I was very impressed by how the work has been organised and by the enthusiasm of a relatively young work force who are making a go of something that is relatively new to the UK. As well as being enthusiastic about what they are doing, the work force understands its importance.
I have outlined what my predecessor did. In normal conditions, I believe that at least some of the costs that I mentioned should have been borne by the industry. However, the steps that we have taken recognise that market conditions are not normal. Since I have been Minister of Agriculture, Fisheries and Food, I have initiated the following steps to help. We have made use of a scheme for private storage aid for sheepmeat, following up the earlier scheme in March. I accept that the money does not go to farmers, but it is intended to strengthen market prices and to benefit all sheep producers. We have removed obstacles to the export of whole sheep carcases to France from the UK, with effect from 8 October, and I acknowledge the help of the hon. Member for Bosworth (Mr. Tredinnick) in his role as Chairman of the Joint Committee on Statutory Instruments.
The EU opened a private storage aid scheme for pigmeat in September 1998, and all EU producers should benefit from the firming up of prices that should result from taking meat off the market. The UK exceptionally allowed an increase in the moisture content of grain entering UK intervention, in recognition of the wet summer, and the value of that to all UK cereal producers is £0.5 million. We are acting on the EU decision that will allow early payment of £100 million in EU subsidy to beef producers.
Those measures have been welcomed by farmers and farmers' representatives, but I do not regard them as a sufficient response to the present difficulties. I am working on a range of proposals with others in the Government, and I hope soon to be in a position to be able to say more to the House. The proposals under discussion are all based on a range of ideas put to me by


farmers or their representatives. The range of ideas offered is not so very different from that offered by the hon. Member for South Suffolk.
We all understand what is under discussion. I know that there is great interest in how much I am able to deliver from one perspective or in what the announcement will be from another. I apologise but I am not able to say anything to the House tonight for reasons which I think those who have experience in these matters will recognise are perfectly good reasons. As the more experienced among us will know, if an early answer is wanted it is no.

Mr. James Gray: Does the Minister accept that farmers are in such a complete state of crisis and suicidal depression over these matters that even though the right hon. Gentleman cannot yet announce what his package will be, some indication of when he will make the announcement would in itself be helpful for the morale of farmers across Britain? Will he make his announcement before Christmas, for example?

Mr. Brown: I am making progress, which should be of some comfort to the hon. Gentleman. I hope to be able to make an announcement within weeks and preferably within days. Further than that I think it is unwise to go without tipping my own negotiating hand. Suffice it to say that I am taking my new responsibilities very seriously and applying some old skills.

Mr. Steen: If there is a little time before the Minister makes his statement, will he examine carefully the experience of French farmers, who have the availability of cheap borrowing and not the ordinary bank rate, which means that they can borrow money at 2 or 3 per cent? That availability to our farmers would help them tremendously over the crisis. Is the right hon. Gentleman planning to consider an alternative scheme by which farmers can borrow at a much lower rate than the bank rate? Is that on his screen?

Mr. Brown: That is an interesting philosophical point. It is rather odd that the parties are again this way round. I believe in free markets and that there should be no artificial construction for one sector to deal with an industry's specific problem. The hon. Gentleman is advocating a specific reduced rate of interest to deal with a particular sector in the marketplace. When I was elected to this place in 1983, we used to have these discussions. I used to do my best for my shipbuilding constituency. The arguments then used to be the other way round. I used to be advocating special state aids and the Conservative party used to explain that that was not the right way forward. We seem to have passed each other as we have crossed from Opposition to Government. Anyway, there we have it.
Farmers complain that there are subsidy regimes in place in other countries that are not available to them. Where these regimes are outwith the European rules it has been the time-honoured position of the Government that the Commission should address that. We have had some success in making these representations in the past. I shall have something to say on the specific point in a moment.
My principal announcements are delayed—I am certain that the reason is obvious to everyone in the House—because they cost money. Let me knock down the idea

that farmers are always asking for money from the public purse. They have not done so. Not one farmer or farm representative has asked me for a commitment from public funds to bail out the industry. I have been asked for measures targeted at the present position, a sense of direction for the future, a constructive dialogue within the sector—with our European Union partners as much as within the United Kingdom—and for political leadership. All of these I intend to provide.

Mr. Christopher Gill: I am pleased to hear what the Minister has just said about the representations that he has received from farmers. There are many of us who believe that subsidies are not the answer for any industry. It is a fact of life that agriculture is subsidised in this country and on the continent, but will the right hon. Gentleman take on board as a matter of principle that the Government can make absolutely sure that it does not add to the overhead burden—the cost to the industry—by Government measures? That would be helpful to the industry and something entirely within the gift of the Government.

Mr. Brown: I am sympathetic to the hon. Gentleman's representations. I acknowledge to the House the specific efforts that the hon. Gentleman has made for the pig farmers who he represents. I am sympathetic to the pig sector because it does not receive large payments from the public purse, even in the current difficulties. I freely acknowledge that the pig sector is in crisis because it asked for a state handout to bail it out. It has made points along the lines of the hon. Gentleman's intervention. I shall have something to say about that when I get to the pig sector in my statement.

Mr. John Home Robertson: To take up some of the previous interventions, perhaps I should say thank you for a substantial arable area payment cheque that I received recently, along with many other farmers. These cheques have helped to keep people employed. Following the intervention from Ludlow, I urge my right hon. Friend to understand that the sort of regulation that guarantees the safety of food is imperative to safeguard the interests of consumers and those of farmers. I hope sincerely that my right hon. Friend will be able to make progress on that, perhaps in the Queen's speech.

Mr. Brown: Yes. I shall have something of substance to say about the Food Standards Agency and how the Government intend to make progress with the proposal immediately after the Queen's speech. Of course I cannot anticipate the Queen's speech.
On the broader question of food standards and whether we should somehow make a concession that would perhaps have an impact on the public's perception of the public health debate, the answer is no. However, there are some technical aspects that the industry has asked me to consider, which I am looking at. Of course, the public's safety must come first and I must be alert to questions of cross-contamination as well as to issues concerning the specific operations of the industry.
I refer specifically to the beef sector. As we all know, one of the most important things that I could do would be to lift the export ban in Europe. The motion deplores the fact that I have not done so. The House will want to know


that today, in the Standing Veterinary Committee, a Commission proposal that would allow the United Kingdom's date-based export scheme to go ahead received a favourable response from a simple majority of the EU member states. If this vote is repeated in the Agriculture Council on Monday and Tuesday, 23 and 24 November, the way will be open for British beef from cattle born after 1 August 1996 to re-enter European and world markets.
I hope that that is welcome on both sides of the House—[Interruption.] I am grateful to the Opposition for acknowledging that this is important to our country. The Opposition spokesman, the hon. Member for South Suffolk, is right to point out that this is for deboned beef. The scheme does not allow for the export of live calves. It does not allow for the export of beef on the bone, but it is an important start. It will enable the British industry to work to get back into markets that we have lost. We shall have to make a substantial effort to get back into those markets, the more so because of the surplus of beef in the EU at present. It is not an easy time to re-enter markets.

Mr. Owen Paterson: Today, I talked to a major exporter of Scottish beef in Inverurie, who had a very substantial export business to Italy, Holland and France. Almost all that beef was on the bone for sale to high-quality restaurants and distributors. They bought it specifically because it was on the bone. They do not want to buy deboned beef. What efforts will the right hon. Gentleman make either to lift the beef-on-the-bone ban here or to ensure that exports of beef on the bone will be allowed shortly after the ban is lifted?

Mr. Brown: Of course this is not the end. I intend to continue to get British deboned beef into other world markets from which it is currently excluded. I intend to make steady progress in getting beef on the bone, when it is safe to do so in response to scientific advice, back into world markets. It is not as though this is one announcement after which the Government will call it all dealt with. I want to make steady progress so that British food products—livestock products—from every sector are back where they should be in world markets. Further, I want British products to be acknowledged for what they should be, which is among the safest products in the world. I want our country's name to be synonymous with excellence. I do not want consumers to be afraid to buy British because they are not certain of the quality or, indeed, the safety of the product. That is my ambition and I shall make remorseless progress towards achieving it. The announcement that I have made is important, but it is by no means the end.

Mr. Michael Colvin: Following on from what he has just said, will the Minister also ensure that, when the British housewife goes to the supermarket or other retail outlet to buy a British product, she can tell whether she really is buying British? Within his current proposals, what can the Minister do to promote British beef and the buying of it, and to overcome some of the current difficulties with labelling?

Mr. Brown: When the British consumer goes to the supermarket, I hope that she—or he—will buy British, not

because the retailer has stuck a Union Jack on the product, but because he or she wants to buy the product because of its quality and the safety and farm welfare standards pertaining to the rearing of livestock in the United Kingdom.
How will consumers know what they are buying? They will have to be told, which is why I am discussing with retailers a UK-specific scheme that will enable consumers to make an informed choice. That suggestion was made by Opposition Members, by Labour Members and by the industry. It is right that I, as the Minister, accept my responsibilities for getting the producer and retail sides of the industry together to discuss proposals of that sort. I think that the House will welcome the comments that I shall make later about my meeting yesterday with the British Retail Consortium.

Mrs. Ann Winterton: Bearing in mind the success of campaigns to persuade people—although they need little persuasion—of the excellence of British beef, pork and lamb and to ensure that consumers are able to recognise such products in supermarkets by their labelling, will the Minister also tackle the catering industry? That industry uses a great deal of meat from a variety of sources, but when people go out to eat, they do not necessarily know that what they are eating is the best of British.

Mr. Brown: Together with my hon. Friend the Minister of State, I am taking a hard look at the catering industry. One third of all livestock products go through catering rather than home retailing, so it is right to pay attention to the catering industry. Clearly, a labelling scheme would not work in quite the same way, but there are other methods of ensuring that customers are informed about the origins of the product that they are eating. We are giving careful thought to the matter. I share the objective of the hon. Member for Congleton (Mrs. Winterton): I, too, believe in informed consumer choice and a free marketplace.
The position that we are now in regarding the export ban has not been easily achieved. We are making progress because our case is founded on science and on the technical implementation of the date-based export scheme, which is itself based on the agreement reached by European Heads of Government in Florence. I have to persuade other Farm Ministers that there is a case for lifting the ban. We have to explain our position to the technical specialists in other countries and to Commission officials. It is also important that I explain the British Government's position to individual Commissioners and to Members of the European Parliament. I pay tribute to the officials from my Department and from the Foreign and Commonwealth Office who have worked so hard to present Britain's case. We are getting there, and we are doing so because we are constructively engaged with the institutions of the European Union.
Before they are so free with their condemnation, may I gently invite the Opposition to reflect on three points: why we have a beef ban in the first place; which party was in power when it was imposed; and, if the lifting of the beef ban is such an easy thing to achieve, why the previous Government did not achieve it? I invite Conservative Members to think back to their "beef war" against Europe, to consider whether it successfully advanced our national interests and to consider whether the approach adopted


by the present Government is more likely to succeed in advancing the interests of British agriculture. I shall not press the point any harder than that, but everyone— especially objective observers—will be able to draw his or her own conclusions.

Mr. Gill: We do not need time to think about it. The fact is that, at the time of the general election, the Labour party said, "Give us control and we shall solve all these problems at the stroke of a pen," but that has not happened. I am sure that the Labour party has learnt a great deal during the past 18 months, not least that ending the beef ban is not just a matter of going to Brussels on a charm offensive.
The Minister is up against the same problems that faced the Conservative Government in negotiating the end of the beef ban and it has taken him a long time to achieve what he has so far achieved. The question to which we and the industry want to know the answer is, why on earth have the Labour Government not ended the ban already, given the promises that they made 18 months ago?

Mr. Brown: Give us another fortnight, at least. The fact is that the British electorate listened carefully to what the Labour party had to say during the last election and decided to give us a chance to do a range of things, including lifting the beef ban. The truth is that we are making some progress. If ending the ban was so easy, the previous Government should have done it. Instead, their war with our partners in the European Union persuaded all 14 of them to gang up against the UK and, when the Conservatives asked the electorate what they thought of that, the electorate responded. My hon. Friends and I are the beneficiaries of that response, as are the Liberal Democrats.

Mr. Tyler: As a totally objective observer, may I say that we Liberal Democrats warmly welcome the Government's approach in this respect? It is clearly far more constructive and it is delivering results; however, there is a long way to go. We should not raise great hopes of opening the market door to Europe, because the prices there are so low that that will not be of great help to us. The prices in the rest of the world, where we held some extremely valuable markets, are as important. As the door starts to open and the ban is removed, will the Minister and his officials consider seriously those third-country markets?

Mr. Brown: I hope that I made it plain that I want British foodstuffs back on world markets and want there to be no health impediment to British agriculture products and those products to be regarded as excellent on world markets. That is my ambition for this country and I intend to make remorseless progress towards achieving that.

Mr. Paterson: Will the Minister give way?

Mr. Brown: Once more, then, in fairness to other hon. Members, I must draw my remarks to a conclusion and allow others to speak.

Mr. Paterson: I am grateful to the Minister for giving way a second time. If he does not get satisfaction from

our European partners with the techniques that he is using, will he take the case of Britain's beef farmers to the European Court?

Mr. Brown: I am content to continue to conduct negotiations in the way that I am currently conducting them and I believe that my approach will be justified by the outcome. I have carefully considered the opposite approach, which is to threaten people. I believe that, at one stage, the previous Conservative Government started to use the mechanisms of the European Court and got thrown out, so I am not overwhelmingly attracted to the approach adopted by the previous Government. I am willing to learn, and what I have learnt is not to do it their way, but to make steady progress using my own approach.
Let me try to draw this consensus together. I welcome the part of the Conservative party's motion that
 "applauds the achievements of British farmers",
and add my applause. I regard it as wholly unnecessary and destructive to try to set one sector of the economy against another, or to isolate rural Britain from the rest of the country. We are one country and it is not necessary to set up artificial divisions. I, too, want there to be "a thriving rural economy" and "a viable agricultural industry". I agree that British farmers should compete in an open market "on equal terms" with others.
That brings me to the Opposition's fair deal for farmers. One of its key points is to take a stand against unfair competition. I hope that the Opposition and the whole House will welcome the agreement that I reached yesterday with the British Retail Consortium that supermarkets will not sell imported meat processed in the UK under a British label. A major source of grievance for livestock sectors, particularly the pig industry, has been that meats can be imported, packaged and described as British. The major retailers have assured me that they will not do that. They have assured me also that, from 1 January 1999, all pigmeat sold in their outlets will be from animals raised to high welfare standards, with no stalls and tethers and no meat and bonemeal feedstuffs. Those who follow these matters know what I am describing. That will help to achieve the recognition that I want for the high welfare standards that British producers apply.
I want the European Commission to investigate in full today's press reports of new state aids elsewhere in the EU and to take the appropriate action if those prove to be contrary to EU law.
I am asked to cut the burden of regulation. I tell the House bluntly that I am not willing to compromise on food safety: food safety comes first, and it is in the interests of British producers that it does. I am willing to discuss with the farming industry the information that we collect from farmers and the form in which we request it and to consider whether there is a better way of doing so. The Government have, of course, considered those issues before. I intend to have the whole issue re-examined by specialist advisers. However, regulations are there for a purpose, and undermining public confidence in the regulatory regime by seeking short-term gain is not the right way forward for the industry.
On public purchasing policy, I am pleased with the outcome of my meeting yesterday with the British Retail Consortium and the outcome of the negotiations that we have been having with the Ministry of Defence.
We can be proud of animal welfare standards in this country. British consumers should be able to identify meat products that have been reared to the highest British animal welfare standards.
Allegations are often made that the supermarkets are taking advantage of low producer prices, but not passing them on to the consumer or, indeed, the farmer. The Office of Fair Trading is rigorously examining supermarket pricing. In the meantime, I am working to draw the whole food chain into co-operative working arrangements. The key point is that each part of the industry needs the others. The debate should not be characterised by villains and victims.

Mr. Nicholas Winterton: The Minister is making an excellent speech, which has defused the situation and will be welcomed by the farming industry. However, I am sure that he is aware that, last month, the National Westminster bank published a report revealing that, if the current crisis continues, 25,000 farmers— 15 per cent. of the total—will be driven out of agriculture. That is a serious prospect. Who will maintain the land? Does the Minister believe that his announcements today will do anything to stop the haemorrhaging from the land of those who produce our food?

Mr. Brown: I accept that the situation is serious, which is why I am trying to flag up the need for a further announcement, which I will make soon. The purpose of today's announcement is not to lift the whole burden of the present difficulties from the industry's shoulders. I cannot do that; no one in my position could. I can intervene proportionately so that the industry can survive the present difficulties. I acknowledge that there is a crisis in the pig industry. I cannot arrange for everyone to survive. I can work constructively with all the parties and point to alternative ways forward. I can encourage, explain and provide support, but I cannot stand against the broad tide of events, and it would not be sensible to do so.
The industry is experiencing a period of change and restructuring. I do not want the present difficulties to accelerate that process so that we are not the masters of our own destiny. I am determined that British agriculture not only survives but has a good, sustainable future. The shape of that future is the subject of a different debate, and I cannot say that in 10 years absolutely everything will be as it is now. All I can do is set the parameters for the marketplace and let people make their own judgments. I can also ensure that change is driven not by short-term difficult circumstances but by the long-term passage of events, including the liberalisation of markets.
The Opposition motion criticises the Government's approach to the countryside. Agriculture is only one part of the rural community, but it remains crucial and the whole appearance of the countryside is dependent on it. The Government recognise the special needs of those who live and work in rural areas. We have provided an extra £50 million for rural transport, new rate relief for village shops, extra protection for rural schools and financial support for remote dispensing pharmacists. That sits alongside our commitment to viable United Kingdom agriculture.
Under the previous Government, the Rural Development Commission recorded the following facts: 83 per cent. of rural parishes were without a general practitioner; 73 per cent. had no daily bus service; 49 per cent. were without a school; 43 per cent. were without a post office; and 42 per cent. did not have a permanent shop.
The Opposition urge me to extend the calf processing aid scheme.

Mr. Yeo: If the Minister is concerned about the deprivation described by the Rural Development Commission, will he tell us whether he has asked the Deputy Prime Minister to reverse last year's cut in the revenue support grant—the cash given to councils in rural areas?

Mr. Brown: The hon. Gentleman will remember from his time in office that government is seamless, and he should address his question to the appropriate Minister, but I shall pass on his comments to my right hon. Friend the Deputy Prime Minister and urge him to treat them appropriately.
I turn now to a policy for which I am responsible—the calf processing aid scheme, which is scheduled to end at the end of the month. The scheme distorts the calf market, forcing prices up at a time when beef finishers' margins are low. Its continuation could result in a shortage of home-produced beef on the UK market in the medium term. After 30 November, most EU member states will be making no contribution to the reduction of EU beef surpluses. However, farmers—mainly dairy farmers— have pressed for the continuation of the scheme until we have more normal market conditions. I am carefully considering that request, but the animal welfare lobby and the abattoir operators—I acknowledge that they make an unlikely combination—have welcomed the decision to close the scheme.
It is not fair to suggest, as the Opposition motion does, that the Government are not committed to farming in the hills. More than £600 million has been distributed to hill farmers this year alone. The Government have always provided support for hill farmers. I intend to do so, as well as considering what further help we may offer. In the short term, I shall do what I can. I intend also to ensure that hill areas receive continuing support as part of the Agenda 2000 package and beyond.
The autumn review is well under way. It is important to remember that hill support is a structured measure, not a measure to top up shortfalls in income. The Opposition motion is misleading on hill support. It refers to returning hill livestock compensatory allowances to 1993 levels. The Conservative Government dramatically cut them in 1994. The severely disadvantaged area payment for cows was £63.31 in 1993, and the Conservatives reduced it to £47.50 in 1994.
Let me correct another misunderstanding. It was said at our last parliamentary Question Time, or perhaps in the Liberal Democrat Opposition day debate, that an additional amount was paid in 1997. That is true, but it was a supplement, from a separate one-off European Union scheme, counteracting the market effects of BSE. It was available throughout the European Union.
The motion urges me to take up agrimonetary compensation. I make it clear to absolutely everyone that aid is not just there for the taking. The agricultural


monetary structures are permissive. Operation of the United Kingdom's budget abatement means that the UK Exchequer bears about 71 per cent. of the cost of EU-refunded aid. If anyone thinks that those arrangements are unfair, I remind them that the arrangements are a direct result of the Fontainebleau agreement, negotiated by the Conservative Government.
The possibility of agrimonetary compensation for United Kingdom farmers was first approved by the European Union Agriculture Ministers in March 1997. Whatever the Opposition say now, the Conservative Government made no commitment at the time to pay such compensation. The only tranche that has ever been paid was paid by my predecessor.
I have the matter under consideration. The hon. Member for South Suffolk is right to ask me about that point. I am considering it, but, as he knows, I have to discuss with others in the Government.

Mr. James Paice: Will the right hon. Gentleman give way?

Mr. Brown: I should draw my remarks to a close, if only to let others in to the debate. Although I have been generous in giving way, it is not really fair to the House to extend my speech and thus keep other hon. Members out of the debate. However, I shall give way to the hon. Gentleman.

Mr. Paice: On the subject of the previous Government not taking up any agrimonetary compensation, does the Minister agree that not a single agricultural product for which a common agricultural policy regime exists is making anything like the price that it made under the previous Government, and that that is why it was unnecessary for the previous Government to take up that compensation?

Mr. Brown: That is not the only purpose of the agrimonetary regime, although the present Government accept that, in some circumstances, there is a case for drawing down within the permissive regime. That is why my predecessor did it, and that is why I have the matter under active consideration. My only point—a narrow political one—is that the regime was in place under the previous Government and they did not take advantage of it. There may be a range of reasons for that, but for the Opposition to urge it on us and not to have done it themselves sits them in a less happy position than they might think they find themselves in.

Mr. Gill: Will the Minister give way?

Mr. Brown: No. I have an enormous respect for the hon. Gentleman and I again acknowledge the part that he plays in these matters, but I have given way to him twice. I understand that the House wants to question me and explore matters with me, which is why I have given way as freely as I have, but, in fairness to others who want to take part in the debate, I should now draw my remarks to a close and let others in.
The part of the Opposition motion that I wish to address is the reference to
 "underspends on the agriculture budget".

Believe me, if I could get my hands on an underspend and I was free to make an announcement now, I would do so. There is no pot of money waiting to be redistributed. The motion refers to annually managed expenditure and the difference between forecast expenditure and outturn as a demand-led budget.
I note that the hon. Member for South Suffolk is calling for more money to be spent under that heading, and I know that he must have cleared that with the shadow Chancellor. I must clear any money that I want to spend with the real Chancellor, and I wonder how the hon. Gentleman can square the demand that much more money be spent in the agriculture sector with the more general approach of the shadow Chancellor, which is that the Government are spending too much money already and should cut expenditure.
I hope that I have dealt with the Opposition's arguments. I have explained my approach. The Government amendment provides a more rational way forward for United Kingdom agriculture, a way that will allow a viable UK agriculture—a broader rural economy—to play its proper, dynamic role in the United Kingdom economy. I commend the amendment to the House.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Michael J. Martin): Before I call the next hon. Member, I remind the House that Madam Speaker has ruled that there will be a 10-minute limit on speeches.

Mr. Peter Luff: It is a great privilege and pleasure to follow the Minister after his ministerial debut in a debate in the House as Minister of Agriculture, Fisheries and Food. It was, by any standards, a fine speech, and we are grateful for it. Obviously, from the Minister's viewpoint, the policy of killing with kindness now applies, not just to animal welfare campaigners and abattoirs, but to the House of Commons. He has shown the House the courtesy that he showed to the Select Committee on Agriculture last week when he appeared before it, and we should all be grateful to him for that.
The Minister's analysis is entirely sound. I hope that the judgment of the agriculture community will be the same for him as it will be for me—not at all bad for a townie. We both have that in common. He has shown great understanding of the issues, but he would agree— the thrust of his speech shows that he would certainly agree—that understanding is no substitute for action. The time is coming quite fast when action will be expected of him. Today he showed some areas where welcome action has already been taken.
The Minister has identified the very strange consensus that exists, not only in the House, but outside it, throughout the agricultural community, about the long-term direction that we must take for British farming—liberalised markets and an end to production-linked subsidies. On that we can all agree.
I believe that the Minister understands that, to achieve that objective, the Government cannot simply sail into the wind—like a supertanker—toward that Utopian and very desirable goal, but will have to behave rather like a


clipper, tacking with the wind in seeking to achieve that objective. That means that there is no inconsistency in providing short-term help to farming now, to help it to arrive at that long-term goal. The Minister will have to behave rather less like the Exxon Valdez and rather more like the Cutty Sark, but I think he understands that. He has certainly proved pretty good at pouring oil on to troubled waters today.
However, there is a real recession out there—a real crisis facing agriculture. As the whole House now understands, that crisis is unique in that it now extends to every sector of farming. When Farmers Weekly regularly publishes the telephone number of the Samaritans, obviously something is seriously wrong. I know from farmers in my constituency, in Worcestershire, about the extent of the problems that they are facing. My hon. Friend the Member for Faversham and Mid-Kent (Mr. Rowe) sent me a letter from one of his arable farmers. It says:
 "According to my costing of last year's harvest, it cost us £68 per ton to grow wheat which we are now selling at £68 per ton, last year it was selling at £85 per ton. Our peas, last year, were selling at £102 per ton, this year at £68 per ton".
Obviously, the situation is exceptionally serious. Farm prices after inflation are lower than they were in the 1970s. I hope that the decision of the Select Committee on Agriculture to launch an investigation of the problems facing the pig industry will help by highlighting some of the problems, perhaps enabling us to learn lessons for other sectors.
The Government must face up to four categories of problem in dealing with the crisis confronting British agriculture. Obviously, the first is the international dimension—the broader economic questions. Yes, there are very big international problems out there, and they have affected some sectors of fanning especially acutely. The Russian crisis has imposed an especially severe problem on pig farmers. The far eastern crisis has been a particularly severe problem for chicken farmers. The problems are real.
In most farmers' minds, the overriding factor must be the strength of sterling. Although there have recently been some weakening of sterling and green pound revaluations, which are welcome, sterling is still strong.
I sincerely hope that the Minister will be able to persuade the Chancellor to draw down the agrimonetary compensation—£48 million for beef farmers, and £89 million for arable farmers. Although nothing is available for sheep farmers, I hope that the Minister will be able to get the compensation that is available, as it will provide a very important symbol of the Government's determination to help farmers.
The second category of problem comprises the self-imposed wounds that have nothing to do with broader economic issues. Although some might say that, because of the Chancellor's decisions, the strength of sterling is partly a self-imposed wound, as Committee Chairman, I must be careful not to be too partisan in my remarks. Nevertheless, there are other self-imposed wounds.
I think that the beef-on-the-bone ban was a self-imposed wound, making it more difficult for the Minister to make the progress that he has made in having the ban lifted. At one stage, it seemed as if the price of

lifting the beef export ban would be a permanent, Brussels-imposed beef-on-the-bone ban. Although the Minister seems to have escaped paying that price, his task was made more difficult.

Mr. Nick Brown: I did not escape it alone, as much hard work was put in by British officials—Foreign Office officials and my Department's officials—in persuading the Commission to separate the date-based export scheme from another proposal on specified risk material that might have been included in the scheme. It is a very important point for the domestic industry, as the hon. Gentleman is right to mention.

Mr. Luff: I am happy to pay tribute to officials in the Minister's Department, who sometimes get a raw deal in contending with difficult situations. I am grateful to them.
The progress that we are making is part of a continuum. I cannot help but notice that the veterinarians who voted today against lifting the ban included some of the Government's most socialist friends in Europe—Germany, France and Spain, who all cast their votes against lifting the ban. In the constructive dialogue, perhaps the traditional friends of the Conservative party down the years, such as Denmark, have been more sympathetic to our case. Although I wonder how much the programme of constructive engagement has shifted the balance, I think that our argument is beginning to get through, which essentially demonstrates the continuum from the previous Government to the current one.
The problems of the beef industry will not be solved simply because the beef export ban is lifted. I worry that the public at large believe that ending the ban will be a cure-all. It will not be a complete cure, as huge problems will remain. I also hope that the Minister will be able to find some money to help beef farmers regain their lost export markets, both inside Europe and, as many hon. Members have often said, outside Europe—in South Africa, for example. I am delighted to hear the Minister's very strong hints—his dance of the seven veils—on the calf processing aid scheme. It seems fairly clear that there will some type of successor scheme, which will be welcome. A successor scheme will be welcomed not least on welfare grounds.
There are many "level playing field" issues that lie within the Minister's control. He mentioned Government buying policies. I cannot imagine any other European Union member state that would be quite as transparent and open as we have been. I hope that he will continue putting pressure on the Ministry of Defence. Although he has been successful on beef, more progress on lamb is necessary. I hope that he will put pressure on local education authorities, too—consistent, of course, with local decision making—to try to encourage them to take a more enlightened view.
I hope that the Minister will reconsider his Department's thoughts on imposing charges on farmers. Although I understood his comments on the safety and security of the food chain—one must respect that concern—I hope that he will not impose charges, as his Department's expenditure plans currently forecast, for use of the British cattle movement service, for example, unless he is convinced that other EU member states levy equivalent charges. We must not unnecessarily handicap our farmers.
I was encouraged by the Minister's comments on welfare standards, on which he has made some good progress. Nevertheless, battery egg producers are concerned about the implications of some Government statements. Producers are worried and are in a difficult position. The consequence of an immediate ban on battery cages would almost certainly be massive imports of American eggs that are produced in conditions that are much worse than those in the UK. We must be very careful when addressing such "level playing field" issues.
We must be particularly careful about new and unnecessary burdens, such as a pesticide tax. I am concerned about suggestions coming from one Department, to the effect that farmers randomly pour pesticides on their fields. That is nonsense. Pesticides are a very expensive input, which farmers certainly do not want to use unnecessarily. Moreover, imposing a tax will not control pesticide use but will only be another burden on British farmers.
The third issue is the problem with the food chain. I was encouraged again to hear the Minister's comments on his discussions with supermarkets. I should say that I have been unconvinced by supermarkets' claims and did not find Tesco's London Economics report particularly convincing. There is no doubt that meat sales are contributing substantially to those supermarkets' overheads.
I noted that, between August 1996 and August 1998, according to the National Farmers Union, farmers' share of retail prices for bread has declined from 18 to 13 per cent.; for pork from 57 to 33 per cent.; for milk from 42 to 34 per cent.; and for poultry from 46 to 30 per cent. Farmers are receiving less from the proceeds of lower prices, which must be a matter of great concern. I hope that the Minister will consider convening a summit of all those in the food chain—including farmers, hauliers, abattoirs, processors, manufacturers, retailers and even consumers—to discover whether the problem cannot be dealt with once and for all, as it has been a running sore for all of us.
The fourth and final category are the "mood music" issues, in which the Government seem to demonstrate a failure to understand the countryside. The Minister claimed credit for rate relief for shops. I have to inform him that the previous Government took that policy decision and passed that Act of Parliament. Credit for that rests entirely with the Conservative party. I lobbied for it intensely, spoke on the Bill, and we got the measure through. I am glad that the Government did not abandon it, but it is our policy.
Attempts to ban hunting, sabre rattling over the right to roam, penalising rural motorists, closing facilities in market towns—I have lost my benefits office, and my magistrates court and county court have been threatened; my income tax office is threatened, which some may say is a good thing, but we still appreciate the service—these are all bad measures. New house building in the countryside cannot easily be dismissed. My constituency faces a new town of 5,000 homes as a result of the Government's failure to translate their targets for brown-field land into local county structure plans. The standard spending assessment will be an important test when those decisions are announced next month.
The Minister has lent a sympathetic ear to farmers and they are grateful to him. As he did at our Select Committee last week, he has offered warm words. The time has now come when he must also lend a helping hand.

Mrs. Diana Organ: On Monday evening as I was leaving my constituency to come to London I passed Westbury village hall and saw a notice that said "NFU Crisis Meeting". I know that the National Farmers Union has internal difficulties, but it was fairly obvious that the meeting was about the crisis facing farmers in the Forest of Dean. All sectors face unprecedented difficulties, as the hon. Member for Mid-Worcestershire (Mr. Luff) has just explained.
On 6 October, I met a group of local farmers who told me about farmers who were either selling up or having to get out of farming. One said that in the past five years he had made a major investment to improve his herd stores and welfare standards, but that he could not even consider carrying out the second necessary stage of investment in his milking parlour and storage. Another farmer came to my surgery on Friday. He was desperate and said that he was now on family credit and did not know how he could continue through the winter.
The shadow Minister referred to the Farmers Weekly article about suicides among farmers. I am concerned for farmers' well-being. Suicide rates among farmers are high and we do not want them to get worse. The businesses that face difficulties are a vital part of our rural economy as they support village shops and other local businesses. Farmers in the Forest of Dean welcome my right hon. Friend's determination and commitment to listen and talk to farmers, and I thank him for taking time out in his busy schedule next week to visit the south-west to hear more at first hand about the problem.
I welcome the Government's recognition of the seriousness of the problem and the great efforts that my right hon. Friend and his predecessor have made to lift the export ban on British beef. That is good news for farmers and the whole country. They will welcome today's decision by the European Union Standing Veterinary Committee. A simple majority was in favour of allowing the date-based export scheme to go ahead. We hope that the vote will be similar in the Agriculture Council.
In response to the grave difficulties that face the agricultural sector, will the Minister consider a short-term package of relief? That is suggested not by me but by local farmers who are under duress. It is not only for the farmers themselves, but for the wider rural economy in the Forest of Dean. Although in rural constituencies such as mine agriculture is a small part of the total economy, it underpins many other activities in the area.
The calf processing scheme is due to end on 30 November. Will the Minister look seriously at that, not only because it provides short-term assistance but because farmers have raised with me their concerns about animal welfare, should the scheme cease?
I welcome the Government's recent announcement of an additional £1 million investment to boost the countryside stewardship scheme, which delivers environmentally friendly farming. The scheme is very popular and oversubscribed. The extra funding will be


concentrated on the upland areas of England. My local farmers, who are from low grassland areas, want an extension for lowland areas as well.
Will my right hon. Friend look again at agrimonetary compensation, particularly for the livestock sector? We have done it once and should do it again. I recognise that there are substantial public expenditure implications, but I am sure that the British taxpayer would be prepared to take the burden of that cost to help rural communities. The £85 million that was paid to suckler cow and sheep producers in January 1998 was much needed and welcomed by farmers. I hope that the Government are examining the case for further assistance this year.
As part of the support that the Government give to agriculture, may we ask for more assistance in helping the beef sector back into European markets when the ban is lifted? It is not going to be easy to get back into those markets. Will my right hon. Friend also look at a programme of wider guidance and training, with other marketing initiatives, to help farmers to set up as a co-operative, so that they can have greater strength when they negotiate with retailers and can be price setters, not price getters?
Lastly, a much voiced grudge of local farmers in my area is the uneven burden of regulation that they face, which does not have to be borne by import producers. The standard that the Government set is understood by farmers. They know that it produces good quality, wholesome and safe products for consumers and gives us good welfare standards, but surely we must ensure fairness; supermarkets must make it clear to consumers that the goods that they buy are of an equal standard.
In the long term, the real solution is reform of the common agricultural policy and Agenda 2000, with its emphasis on an integrated rural development policy, but at present we face a real crisis in the Forest of Dean and throughout the country. The crisis is being dealt with by the Government because they will not treat farming communities of the 1990s in the despicable way in which the previous Government treated mining and shipbuilding communities of the 1980s.
This Government are concerned about urban and rural communities. They are concerned about farmers— primary producers—as well as high-tech businesses. I thank the Minister for his support and efforts so far for the farmers of the Forest of Dean.

Mr. Charles Kennedy: In contributing briefly to this Conservative-moved debate, may I also welcome and congratulate the Minister of Agriculture, Fisheries and Food on his debut full-speech performance, as it were. As we know, over the past few months, with characteristic patience, he has taken time to do a lot of listening. Tonight, we got an extended chance to listen to him. Hon. Members on both sides of the House could find much positive encouragement both in his approach and in his general political attitude to his ministerial responsibilities.
When I come back with one or two points later, perhaps the Minister will accept that I do so not simply for the sake of being critical in the parliamentary party political sense, but to try to be constructive, as he is still considering and arguing for a package of relief.
It was perhaps a bit of bad luck for the Conservatives that, on the day the motion came up, we had such a significant breakthrough at Brussels. They share the pleasure in that, but they would scarcely be politically human if they did not think that it was just a bit inconvenient. If it had happened tomorrow, they could have claimed that it was their motion that had put things over the edge from the Government's point of view, but there we are; no such luck.
However, it is important that all parties express their pleasure at the degree of progress that was achieved today. Without any shadow of doubt, it is a significant breakthrough; for once, the Government were giving a slightly underspun line in today's news bulletins. It marks an important step forward. Let us hope that, in due course, it leads to both the loosening and, ultimately, the complete lifting of the ban.
We are dealing with a Conservative motion. We had the chance to move ours only 10 days ago, so our amendment to the motion is just a complete restatement of what we were saying 10 days ago—unlike the Conservatives these days, our policy can remain consistent for 10 days. I notice that, in the earlier debate this afternoon, we got at least three different Conservative policies on some of the issues.
There is a difficulty in this debate. Clearly, in moving the motion, the Conservatives, after such a long continuous period in office, want the rest of us to suffer from collective amnesia. At the same time, they are having to fight old political battles themselves: battles which ended in such decisive defeat 18 months ago and will again end in decisive defeat if they go to the vote in the Division Lobby tonight.
It is breathtaking, given the importance of Europe to UK agriculture, that unlike the other two motions, that tabled by the Conservatives—who have considerable difficulties on the issues—does not mention the common agricultural policy, its reform and Agenda 2000. We cannot have a realistic debate about the future of British agriculture without referring to the common agricultural policy, its reform and the implications of that reform for domestic agriculture.
Given that there will be a move away from production subsidy towards rural development, with further diversification, conservation and environmental aspects being built in to countryside support as a whole, particularly farming support, it is vital that any British Government trying to help to shape the direction of policy should bring some credibility to the European negotiating table.
No Government can have that credibility unless they are committed to the European project and have something positive to say about its most important aspect, which is the single European currency, as the farming industry well understands. It is essential that we should make it clear in the signals that we send to Brussels and to the Commission, where the long-term decisions will be taken, that two UK political parties have that conviction of the long-term efficacy of the single market and the single currency—although we would like the Government to go further and faster than they are—and that one party is way out of step. It is little wonder that there is no


reference to matters European in the Conservative motion, because the Conservatives have lost all internal conviction and all external credibility on those matters.

Mr. Paterson: Will the hon. Gentleman give way?

Mr. Kennedy: No, I will not.

Mr. Patrick Nicholls: This is silly.

Mr. Kennedy: We are debating a Conservative motion and it is right to look at the position of the Conservative party on the countryside and agriculture. I find it unbelievable that the Conservatives get so upset about the slightest scrutiny of their policies. That speaks volumes about the mess that they are in. If they want to come to the Floor of the House with proposals, they should expect them to be scrutinised. That is what we are doing.

Mr. Paterson: rose—

Mr. Hayes: rose—

Mr. Deputy Speaker: Order. The hon. Gentleman has said that he is not giving way.

Mr. Kennedy: Thank you, Mr. Deputy Speaker.
I should like to make some suggestions about where the Government should go from here on the domestic matters that are within their control. First, there is the hill livestock compensatory allowance, which is under review. There has been a breathtaking call for a restoration to the levels paid shortly before they were cut by the previous Government. It was clear from last week's debate, when senior Labour Back-Bench voices were raised on the matter, that there is an all-party consensus on the issue. The Minister would do well to heed that fact, politically in the House and practically outside. There has been a disastrous collapse in incomes not just in the hill areas but in the lowlands. I hope that the Minister will respond positively and use the rapid administrative and financial injection that the HLCAs can provide.
Secondly, it is important that the Minister should do everything possible within the European rules to encourage beef marketing and promotion abroad. It is clear from the experience of Northern Ireland that it will be a slow process, even from the date when the ban is eventually gone completely. Although the Minister is correct to say that farmers must work together and co-operate, equally, he must give a co-operative boost to their efforts. If they deliver their side of the bargain, the Government should deliver theirs.
What the Minister said about his discussions yesterday with the British Retail Consortium was extremely encouraging. Product labelling and the behaviour of supermarkets must obviously be kept under the closest scrutiny. It is important that we do not let up on the supermarkets—not least while the jury is out on that all-important Office of Fair Trading report.
I do not want to break the 10-minute rule, so I shall leave the Minister with two specific recommendations. He spoke about bureaucracy and red tape, saying that he would not in any way surrender standards—and we agree. There is much bureaucracy and red tape in agriculture.

Farmers all too often tell their Member of Parliament that they have faithfully tried to fill out the form but have not done so correctly. They are not trying to be corrupt or to abuse the system. They have often been given misleading or inaccurate advice locally over the telephone.
In too many such instances, the case cannot be referred to the ombudsman because it is not one of malpractice. Will the Minister consider the practice adopted for the Child Support Agency? As a result of the huge problems that have accumulated with the agency, about which we all, as constituency Members, know, a degree of independent trouble-shooting has been built into the system for cases not of political maladministration but, as common sense suggests, of clear individual injustice. The Government could do much to try to advance the matter in agriculture.
I refer the Minister to the days of the Lib-Lab pact, all those years ago. One of the concessions that the Liberals were able to influence the Labour Administration to make during a bad time for agricultural income was the introduction of a period of roll-over tax relief. I know that my hon. Friend the Member for Torridge and West Devon (Mr. Burnett) has been in correspondence with the Minister about the matter. Given the horrendous difficulties, will the Minister contact his old chum at the Treasury to see whether it might be responsive to the idea of roll-over tax relief—for, perhaps, three or five years— for UK agriculture? For many who are presently badly hit, such a device could even out the problems of their present trough, and, hopefully, maintain viability for the future. I see that the Chief Secretary to the Treasury is present; he will have heard that point.
I hope that the Minister and his Cabinet colleagues will accept our approach in the constructive spirit in which it is offered. I hope that we can continue to put so much of the past behind us, get through this undoubted crisis and begin in a more united and sensible way to build a better profile for British farming.

Mr. Martyn Jones: I represent many farmers who are in dire trouble. It is no coincidence that the first demonstrations against the import of Irish beef were in north Wales. I am very pleased, however, that that line of action is no longer the policy of the National Farmers Union and the Farmers Union of Wales—I do not suppose that it was actual policy—and that, with some good effect, farmers are trying to put their case through proper democratic procedures. I have had many meetings with farmers in my constituency, at which they have explained their difficulties.
One reason why farmers resorted to demonstration was that they were, to a certain extent, misled by the idea that there is a huge pool of agrimonetary compensation waiting to be dipped into. As has been made clear, certainly in debates in the House, the compensation is in tranches. The previous Minister for Agriculture, my right hon. Friend the Member for Copeland (Dr. Cunningham), gave as much as he could to the beef sector. I stand to be corrected, but I think that he gave 95 per cent. of available compensation to the beef sector, and 75 per cent. to the sheep sector.
We have heard the usual rubbish from the Opposition— although it is gratifying to hear about their conversion to state intervention in industry. I have not heard much about


that from them in steel and coal debates, but things move on. We have not heard many apologies from them for the BSE problem, either.
I do not think that anyone in the debate so far has mentioned the fact that the price of milk has fallen drastically, partly because of the winding up of the Milk Marketing Board. Had it still been in existence, I do not think that there would have been such a problem.
We have not heard much about the strength of the pound, either, because it is now weaker than it was when we took power in May 1997. Milk, beef and lamb prices have been steadily dropping over the past two years; the graph is clear, and something has to be done.
The Welsh Affairs Select Committee looked into the crisis in the livestock industry. It took a slightly different tack from that taken by the Agriculture Select Committee, in that one of our evidence sessions, with the farming unions, suggested that there was a problem with supermarket pricing. It is strange, to say the least, that the price that the consumer pays in the supermarket does not seem to be dropping commensurately with prices in the cattle market.
All kinds of factors have to be taken into account, but from the evidence from the supermarkets, the meat processors and the catering sector, it was difficult to find out precisely what was happening with prices. We therefore recommended that the Office of Fair Trading investigate supermarket pricing, and I am delighted to say that it is doing so.

Mr. Richard Livsey: As Chairman of the Welsh Affairs Select Committee, will the hon. Gentleman, like the rest of us on the Committee, urge the Government to ask the OFT to produce its report as soon as possible?

Mr. Jones: I agree with the hon. Gentleman that that is essential. It is interesting to note that the supermarkets are now attempting to help. It might be churlish to suggest that they might not have helped if the Office of Fair Trading had not been breathing down their necks. However, I am a little cynical, and I suspect that that is a possible reason.
Another factor on which the Select Committee focused was immediate help. We are finding a consensus in the Chamber that some immediate help is needed. I believe that it should be targeted, and hill livestock compensatory allowances are a good way of reaching those who are most affected. That is the nature of the game. We need to help those people, because there is not a bottomless pit of money.
I wish my right hon. Friend the Minister well in his meeting with the Agriculture Ministers, and I hope that we achieve success there.

Mr. Nicholas Winterton: I am sorry that the Minister of Agriculture has left his place, because I wanted to tell him that I found his speech reassuring. He has, however, given some hostages to fortune, and I hope that those are not called upon, because I hope that his speech has given some encouragement to the beleaguered farming industry.
To the Minister of State, who has remained on the Treasury Bench, I have to say that, in all my years in the House, I have never known a time when farming faced such severe challenges. Not only in Macclesfield but throughout the United Kingdom, as we have heard tonight, agriculture is in crisis.
The Minister admitted that, and he also said that the distinctive feature of the present difficulties is that virtually every branch of agriculture is affected at the same time. The public are aware of the problems in the beef industry, but on other fronts there is little consolation for our hard-pressed farmers. Cereal prices are down, pig producers are making losses, and dairy farmers are being driven out of business.
The hon. Member for Clwyd, South (Mr. Jones) was, I think, the first speaker in the debate to mention the reduction in the milk price. We have talked about the problems of hill farmers, and to my mind those are so severe that the very fabric of our cherished countryside is at risk.
According to a National Farmers Union survey, next year the average income on hill farms will fall below £8,000, compared with £12,000 last year. I do not need to tell hon. Members what that will mean to families on small farms across the land. The prospect is indeed dire.
A report from Deloitte and Touche in October predicted a 48 per cent. drop in farm incomes in the current financial year. Last year, United Kingdom farmers' incomes dropped by 56 per cent. That is a huge drop, whatever it is compared with. I am deeply worried. My instinct is to favour the small to medium-sized farm. Big is certainly not beautiful in my view, and it is therefore those farms to which support should be directed.
On top of that grim short-term outlook, there is uncertainty over the reform of the common agricultural policy with Agenda 2000; environmental pressures are growing; there is increasingly monopolistic buying power in the hands of the supermarkets, to which virtually every speaker so far has rightly referred; and there has been an explosion of public interest in food production and how that should be regulated. The latter matter could impose further financial burdens on farmers as well.
I do not suggest that all those difficulties have been caused by Governments—some have not—but what is certain is that the present Government appear to have shown a cavalier disregard for the concern of farmers, and a lack of understanding of their problems and the fears of the wider rural community. I say to the Minister that I hope that some of those fears, and what people perceive as that cavalier disregard, may now die away because of the sensitive way in which the Minister of Agriculture has tonight addressed the serious problems facing agriculture.
As the hon. Member for Clwyd, South said, 10 months ago, the traditional image of farming was shattered, when, a couple of weeks before Christmas, a group of north Wales fanners decided to take matters into their own hands and blockaded the port of Holyhead, throwing a consignment of Irish beef burgers into the sea. Such direct action was caused by frustration; the message was, "Enough is enough."
The United Kingdom beef industry has done everything that has been asked of it, and the United Kingdom has, I believe, met all the requirements of the Florence agreement. It is time for politicians across Europe to


recognise that, and the efforts that have been made, and to lift the ban on beef exports, including—dare I say?—beef on the bone.
Let me make it clear: devastation was brought upon our beef industry not as a result of the previous Government, and not even as a result of the 18 months that this Government have been in power; it was entirely down to Euro-politics. It has paid our competitors in the European Union to have British beef banned, and the longer it is banned the better, for many of them.
Once highly profitable markets for our beef in European countries have been exploited by other nations. Those markets have now been lost to the United Kingdom, I believe for ever. Political interference by member state Governments to satisfy their own agendas must not be allowed to delay a decision for the complete lifting of the beef ban.
The hills and uplands play an important role in United Kingdom beef production, because almost 70 per cent. of the beef herd is in less-favoured areas. Hill livestock compensatory allowances are designed, as the Minister knows, to ensure the continuation of livestock farming in those areas, which is absolutely essential if they are to continue to be productive and to be farmed. What would happen to them if they were not farmed?
At this year's review of HLCAs, it is essential that full account be taken of the critical incomes situation. If the European Commission maintains its objection to the use of HLCAs to offset adverse income trends, the Government—as one of their supporters, the hon. Member for Forest of Dean (Mrs. Organ) has urged the Minister— should again use agrimonetary compensation to assist the less-favoured areas and the lowland beef areas.
As the Minister knows, the continuing strength of sterling is having a major impact on the beef sector. If the exchange rate of the pound against European currencies remains at current levels once the ban on beef exports is lifted, United Kingdom traders may still face severe difficulties in re-establishing a market that, at its peak, took about 28 per cent. of our beef.
I congratulate the Minister on facilitating the export of whole carcases of sheep over 12 months old to designated French abattoirs. That is a good move, and it has been warmly welcomed. It is also important that the number of designated French abattoirs is increased, because the inability to export whole sheep carcases has had a disastrous impact on sheep prices. Clearly, the implementation of bilateral agreements with France on sheep exports is necessary.
What is certain is that the Government's policy of deliberately maintaining a strong pound—for whatever reason—is crippling farmers as surely as it is destroying some of our manufacturers. The loss of a family farm that has provided a living for two or three people for generations may not make the headlines in many of the newspapers, as the closure of a large factory would, but for the men and women involved and the work they do, it is no less traumatic.
The cumulative effect on rural communities will be devastating unless there are some policy changes, with action and not merely words. Therefore, I call on the Government to fight the corner for the British farmer, not only in this country but in Europe. Sadly, the British farmer appears to be appreciated only in times of war or crisis. Farming is facing a crisis. Let the Government and the people give the industry the support it deserves.

Mr. Alan Hurst: I welcome the opportunity to speak in this debate, and to congratulate my right hon. Friend the Minister of Agriculture on a speech that in many ways almost united the House, for a while at least. Even the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) almost went along with the tripartisan feeling of unity that followed, which is to be welcomed.
Farmers, whatever their constituency, are not particularly interested in who did what, when and where, or in saying that that Government did this but another Government are doing something else. Farmers have jolly long memories—going back centuries—so they can certainly remember what has happened in the past 20 years in politics. However, that is not the issue.
The issue is that there are grave difficulties—I hesitate to say "a crisis", as we have been told that its use might be inadvisable—in British agriculture in the short term, and it faces grave risks in the long term. There is general agreement about the measures that my right hon. Friend the Minister has introduced or is hinting at, but they will not mean an end to the problems of British agriculture: I endorse the words of my hon. Friend the Member for Forest of Dean (Mrs. Organ) and her pleas.
I must cast some doubt on the wonders of the golden calf of the free market. I do not want to get into trouble by saying too much against it, or by not being seen to worship it fully, but we must understand that the sweeping of the free market through some parts of the world is one of the many factors that are harming British agriculture. Since economies are now globalised—a dreadful word—the collapse of economies in other parts of the world has an effect here, which permeates down to the farm at the bottom of the road. Unless we get reform of the common agricultural policy right as soon as we can, the free market will blow through our farms and create greater havoc than many of the diseases that have cursed our agriculture through the decades.
We must get the system of supports right, and I was grateful to hear Opposition Members saying so. Farmers will not care too much whether their incomes come from being the custodians of the land that they and their families have farmed for generations, or from raising crops or livestock.
Farmers want to be part of and contribute to the community in which they have lived for many years. If they are preserving our heritage, they should jolly well be paid for doing so. That would not be a subsidy; the rest of us would be paying farmers properly for doing what we want them to do for us. The sooner we move to such a system of support and away from the endless incentives to over-produce, the sooner we will get things right.
Time is not on our side, however, and it is certainly not on the side of the family farmer. We hear the word "restructuring" bandied about—hon. Members have spoken about it in the context of other industries—but restructuring can take a number of forms. I fear that it will take the form of the destruction of small farms and farms in poorer and remoter areas, with vast tracts of land being taken over by combines of organisations whose primary interest is land value, not land use.
We must search urgently for medium and long-term solutions to the problems that our farmers face. In agreeing on the immediate measures that need to be taken, we must not overlook the urgent need to act to retain the structure of rural Britain as we have known it for so long.

Mr. John Hayes: The hon. Member for Braintree (Mr. Hurst), whom I am delighted to follow, was cautious about using the word "crisis". I shall be less so: agriculture is in crisis. The Minister is right to be careful about the use of language—exaggeration is not good for the industry—but it is inappropriate to understate the case. It is important that farmers understand that we appreciate the extent of their difficulties, so I am not hesitant about using the word "crisis", but I am not suffering under the same discipline as the hon. Member for Braintree.
Measured in any terms, agriculture is in crisis. The 56 per cent. fall in incomes over the past year, the level and cost of borrowing, and the fall in the price of products across the sectors all show that it is so.
I notice that the Liberal Democrat spokesman, the hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy), and the hon. Member for North Cornwall (Mr. Tyler) have not had the courtesy to stay to hear the debate. Their suggestion that what has been happening is part of a continuum or general trend is wholly untrue. There was a downturn in almost every sector in 1996, but, compared to what has happened in the past year to 18 months, that downturn was very small indeed. In the arable and livestock sectors, the real problems and the significant decline in incomes have been in the past 18 months.
It would be nonsense to pretend that this Government caused all that, but the scale of the crisis requires emergency action. It is inappropriate to point the finger at Conservative Members and the previous Government, because the current problems are of different proportions from those of two years ago, when it might have been legitimate to blame the Conservative Administration.
I was delighted by the tone of the Minister's remarks, which was in stark contrast to that of his predecessor. I am reminded of the maxim that, to get on, one must be very clever or very nice—the Minister has clearly opted for the latter course. I would say that perhaps the former course was not available to him, but that would be ungracious. The tone, however, is only part of the story. It is important that the Government are listening, but their listening must be backed by action that is, in the Minister's word, proportionate.
There is no question but that the Conservative party legitimately speaks for rural Britain; in psephological terms, it is the principal party of rural Britain. [Interruption.] The hon. Member for Stroud (Mr. Drew) may wave his head about, but, if rurality is measured by a combination of agricultural employment and sparsity of population, the Labour party is the third party of rural Britain. It holds less than 20 of the 100 most rural seats. In England, it holds fewer than five of the 50 most rural seats. The Conservative party is the legitimate spokesman of the rural community, with the Liberals trailing some way behind.
It is also true that the Conservative party speaks up for rural Britain. We hope that the new Minister will be seen a little more diligent in attending conferences, visiting shows and mixing with farmers. His predecessor was not famed for that—he was notably absent from some major events in the farming calendar—and we hope for a change of emphasis as well as tone.
The Government must take some positive steps. It is important to emphasise that agriculture is different, and should be treated differently, from other industries. Rural Britain and agriculture are not synonymous—probably the majority of employment in my constituency is related to agriculture, although that is not true throughout the whole of rural Britain—but agriculture holds a special place, not only because of its custodianship of the land, as the hon. Member for Braintree said, but because of family connections, the long-standing nature of the businesses, and the contribution they make to the wider community. Rural and urban Britain should not be separated, but they require different solutions.
I agree that we should consider whether article 36 of the treaty of Rome could help us to create a "level playing field" in trade. We need to consider fresh marketing support, not only for the beef sector but for the whole industry. We should try to improve the advice and research available to farmers. Someone spoke in an earlier debate about farming our way out of the crisis. That cannot be the whole solution, but it can be a part of it. It is a source of shame that the Government have cut the agricultural research budget.
We need a package of aid. The Minister talked about keeping that in proportion. The proportions are there for him to see: I have already mentioned the fall in incomes and the scaling down of the industry. In response, we surely need a proportionate multi-million pound aid package.
Members of all parties on the Select Committee highlighted the fact that the Government seem to lack a strategic vision for agriculture. We need that long-term vision, as well as the short-term aid, if Britain's farmers are to be reassured that they have the support of the House in competing with other nations in feeding the world, as Britain has done in the past and will do again in the future.

Mr. Mark Todd: I want to do something that, I regret to have to say, for the Whips' benefit, is slightly unusual for me, and compliment my right hon. Friend the Minister on a thoughtful speech that drew out many of the consensual elements that exist in the House on the subject. He made this a much more positive and interesting debate than it would otherwise have been, and I warmly commend him for that. The farmers whom I represent have already told me how much they welcome his role and his listening function, and I am sure that hon. Members of all parties agree with that. The strategy remains much the same, but there was a need to listen and to learn, and I think that he has done that.
We should also welcome the progress that has been made on the beef ban. A critical further step in lifting it was taken today, but there is far, far more to do: we must get the ban lifted on beef off the bone, then beef on the bone, and then livestock. Beyond that, we need to win back the markets that we have lost. One of the critical issues, on which I would welcome a ministerial opinion,


is whether we can assist our agricultural sector to win back those markets in the future. We have started to hear encouraging noises and a recognition of the problems that the industry faces. Now is the time to turn that into firm policy.
We should compliment the Government on persuading the retailers to adopt a clearer position on defending the strengths of British agriculture and being more honest with their consumers. That has required substantial work by the Government and a recognition by retailers of the strong public consensus on the matter. Both sides of the House should commend that.
Any steps that we take to put together a short-term package must be consistent with a long-term strategy. In dealing with the crises—I use the plural—that we have faced in farming, we have tended to look for short-term fixes and ways of supporting farmers into the next crisis that they will face in due course, instead of looking at the medium to long-term future of farming in Britain.
Hon. Members have implied that, for the first time ever, small farmers are winding up their businesses or transferring them to larger farmers, but that has been going on for decades, and will continue. I should be sorry if any steps that we took impeded the normal process of the market in moving towards more competitive units or more focused—[Interruption.] Hon. Members may disagree, but there is an alternative—more focused attention to niche markets or diversification in the use of farm assets.
We should encourage farmers to explore all those possibilities. We should not give temporary lifelines to businesses that have no honest long-term future. I say that baldly, as I have said it to the farmers whom I represent—10 days ago I spent three hours speaking to a dozen of them in my constituency. I do not have a habit of pulling punches with them, and I would not do so in the House. Some farmers are in unsustainable businesses and we must help them to find alternative uses for their assets or alternative occupations. We cannot fool people that they can maintain their businesses in the future as they have done in the past.
If we are to extend the calf processing scheme, which I believe should be extended, we must carefully balance that against the conditions that those producers will face in a freer—but not free—market, once the ban is lifted. We must recognise that that market is in surplus across Europe, which is a tough marketplace.
I empathise with those who say that we must scrutinise the relative costs of our regulatory regime. I do not question the animal health or food safety aspects of that regulation, but I question the cost burdens that are passed through the industry and whether our officials have learnt enough from the approach taken by other countries in tackling those tasks in an EU regime. I do not believe that we learn enough from other countries that have the same tasks as we have, but undertake them with greater efficiency and sensitivity.
Our longer-term strategy needs far more work. That strategy is the business of Government because we spend £4 billion a year supporting the sector, and we should be concerned about whether that money is well spent.
We have no obvious grasp of a rural development strategy. If by a miracle of miracles an agreement was struck tomorrow on Agenda 2000, and a large amount of money was transferred to rural development, we would

have little idea of what to do with it. We have developed little thinking in that area. We were slow to take up the opportunity of objective 5b funding in rural areas. We will be similarly slow to take our opportunities on rural development.
We cannot hold off on development of a long-term strategy simply by saying that it is a matter of common agricultural policy reform. We have to serve our farming community and our citizens, and that obligation overrides others. We should be quite clear about our responsibilities. A long-term strategy is also the best way to persuade our European partners to reform their practices. If we have a clear vision of our own, we will be more persuasive.
We should also recognise fully that the strategy in Agenda 2000 will not succeed in the World Trade Organisation negotiations. We should own to our responsibility to look beyond those limited proposals towards what the marketplace for farming will be like in 10 years time. We have not yet done that thoroughly. The Government need to think carefully about how short-term measures, which are of course welcome, can be balanced with a long-term strategy that will be tough, but to which many positive, market-oriented farmers look forward with enthusiasm.

Mr. William Thompson: It is right that we should debate the tremendous crisis in the farming industry, highlighting the difficulties that farmers are going through. After the general election, I was surprised by the attitude of the Government. They seemed to be much against farmers. We were told that the Government had poured between £3 billion and £4 billion into the BSE crisis, that farmers had had enough money and that the Exchequer would not give them any more. The then Minister of Agriculture, Fisheries and Food was fairly combative, and he seemed not to be very sympathetic to farmers.
The power of the Ministry seems to have reduced greatly. We seem to be under the control of Europe, which decides our agricultural policy. We can do little without the consent and approval of Europe. Unfortunately, the only power we seem to have is the power of persuasion. We seem unable to threaten, but merely to persuade. However, it would be churlish of me not to recognise the work done by the previous Minister on BSE, which resulted in the lifting of the export ban in Northern Ireland. Now that the ban has been lifted, though, we are recognising the difficulties of exporting beef. Markets have changed. There is a surplus of meat in Europe. The standards that must be met before beef is exported are high. It will be a long time before Northern Ireland exports the same percentage of beef as it did before BSE. We need a good marketing operation to persuade people that our beef is the best.
The farming crisis has hit Northern Ireland particularly badly because farming is our chief industry. The pig industry has been badly hit by the fire at Lovell and Christmas, where, overnight, the number of pigs that could go to the factory was reduced by 40 per cent. The situation in Northern Ireland is perhaps much worse than that on the mainland.
I welcome the change in the Government's approach. It seems that they have recognised that there is a serious farming crisis. That was noticeable this evening in the message given by the new Minister of Agriculture. I think that we would all agree that since he was appointed to his post he has spoken to farmers and has an appreciation of their needs and the difficulties that they face. We saw that sympathetic approach this evening.
It is always easy to argue against someone who is incompatible. It is more difficult to argue against someone who agrees with us all the time. The problem tonight is that the Government have agreed with everything that the Opposition have said. The Minister seems to agree that the various points that we have been making are true.
I welcome the Minister's speech, which drew a response from both sides of the House. We have promises that a range of proposals will be coming forward and that the calf processing aid scheme will be reconsidered and that various other things will be given careful consideration. We have promises and we have expectations. I am sure that the farming community will look forward to delivery of its expectations, and the sooner it comes, the better.

Mr. David Drew: I had the opportunity last week to listen to Ben Gill, the president of the National Farmers Union, who came to talk to local farmers. The meeting took place in the constituency of the hon. Member for Cotswold (Mr. Clifton-Brown) but there were plenty of representatives from my constituency.
In quite a wide-ranging speech, Ben Gill made two key points and—this shows how things have changed—I almost entirely agreed with him. First, he said that if farmers were to look for reform they had to understand that value added had to start from the bottom up instead of the way in which the food chain now operates, which works downwards from the retailer's margin. Secondly, he said there must be much greater collaboration among farmers. Ben Gill would not attach the word co-operation to those aims although I would. Certainly there is a need for a new way of working.
Ben Gill's third point was particularly valid. Whether speaking on his own behalf or that of the NFU, he was quite worried about pressure from the United States in terms of the agri-chemical business and the changes that this is making to British agriculture. I share his misgivings.
As there is a shortage of time I shall merely add to the points made by Ben Gill and try to find solutions rather than continuing to analyse difficulties, crises and long-term problems. First, we must recognise that although we are much in favour of help in the form of environmental subsidies and aid, farming is still an important part of the rural economy. It must be recognised that there is such a thing as an economically sensitive area and provide support accordingly. That is so important in the context of tenant farmers and other farmers who are not necessarily from the wealthier end of the farming community.
Secondly, we must recognise—this goes back partly to the point made by Ben Gill last week—that farming must be put much more on a business footing. I have nothing

but respect for the way in which farmers farm, but, from an outsider's perspective, I see the limited business experience that some farmers have and their genuine need for help in terms of training. In addition, we must look at ways in which markets could be made more easily accessible for farmers.
Thirdly, I am sure that hon. Members would agree that the centralisation of the food supply may have gone too far. Even though there have been advantages in that food standards, hygiene and safety have become paramount, we must recognise that food can be supplied locally. A localised food supply is not only what consumers appear to want, but represents a saving in transport costs and an increase in choice. If we can make progress on that, we might begin to arrive at long-term solutions to an extremely difficult short-term problem.

Mr. Owen Paterson: The Secretary of State charmed us all with his speech and his generosity in taking interventions, but I fear that he has underestimated the seriousness of the crisis. An industry whose turnover has dropped from £4 billion to less than £1 billion in two years is, by any definition, in crisis.
Today at the Oswestry auctions, lambs were fetching as little as 61p per kilo on average—about half what they fetched two years ago—and one farmer told me that the sheep industry is "a total disaster". I should like to give the Government a few quick, practical measures that would be of immediate help to the sheep industry.
The farmer I spoke to said that "the Government had panicked about slaughtering costs". There is an abattoir near to my home that employs four meat inspectors, one vet and only four other employees. It sends a cheque every Monday morning for £3,880 to Chester. That is crazy. We must reduce those costs, which are a burden to all farmers. The Select Committee on Welsh Affairs reported on "The Present Crisis in the Welsh Livestock Industry" on 20 May, but we have yet to receive a reply from the Government. We were told that we would receive a reply just after the recess, but have not yet got one.
Finally on the subject of sheep, I acknowledge that the Government are good at spin and controlling publicity and ask them to address themselves to the dangers of maverick, publicity-seeking scientists bursting on to the radio waves and, with one or two sentences, causing severe damage to the livestock industry. That is what happened to the sheep industry in the summer.
Turning to the beef industry, there is a crisis. Good finished bullocks were fetching 75p to 78p per kilo today at Oswestry—way down on the £1.10 to £1.20 per kilo they were fetching a couple of years ago; and stores are making only £120. The future is bleak. In such a climate, it is crazy to consider abandoning the calf scheme. I was pleased by the Minister's equivocation on the point, because, on commercial and animal welfare grounds, some form of the scheme must continue. Before arbitrarily ending it, a way out must be considered, so I suggest that the Minister reads this week's Farmers Guardian, which contains an interesting article about the potential veal market on the continent.
Hon. Members on both sides expressed doubt about our ability to reopen the beef market. One exporter in Inverurie had a substantial business: a third of


his turnover—£14 million to £15 million—came from exports to Holland, Italy and France. I stress that the meat was almost entirely beef on the bone. That exporter said today:
 "They know that what they are getting from the rest of Europe is rubbish. They want British beef for quality. Australia, New Zealand and southern Ireland do not compare.
Prior to the BSE crisis, he had a £42 million turnover, but that figure is now down to £30 million. He reckons that he could get at least one truck per week back tomorrow if the beef ban could be lifted.
We have heard good news today, but we have yet to see any practical gains. I appeal to the Government to threaten our EU partners with a return to the European Court if they fail to lift the ban, because it is rank hypocrisy to continue it. We in this country have taken the measures needed to make our meat safe and the response has not been good enough. From British cattle exported in the past five years, the Germans should have picked out 285 cases of BSE, but they have picked out only five. We know that there are now no human or animal health grounds for banning British beef.

Mr. Nicholas Winterton: It is politics.

Mr. Paterson: It is entirely politics, as my hon. Friend says.
In the dying two minutes of my speech, I turn briefly to milk, where there is also a crisis. Milk prices are down to 18p or 19p a litre. I am delighted that the Minister of Agriculture, Fisheries and Food has returned to hear that farmers reckon to break even when they are receiving between 14p and 18p. A 4p quota on top of that price means that they cannot make money. The money tied up in quota would far better be invested in ring parlours and modern equipment so that we can compete with countries such as New Zealand and Argentina, where milk production has increased by 28 and 36 per cent. respectively in the same time that European production has marginally dwindled. A large dairy farmer in my constituency said:
 "Quotas are holding Europeans back as we are in a supply-controlled economy.
When the Minister replies, will he clarify the Government's view on the end of milk quotas in the Agenda 2000 reforms?

Mr. Patrick Nicholls: Only the shortness of time prevents me from being able to refer to each of the 11 excellent speeches by Members on both sides of the House. It says something about the way in which we conduct our affairs that it is possible to say that.
It is clear that the industry is in crisis. The Country Landowners Association has told us that upland farmers are earning substantially less than £10,000 a year. Letters from the Tenant Farmers Association tell us that hill fanners are making less than £7,000 a year. In the west country, where I come from, The Western Morning News is full of examples—for which I give it full credit—of people living in the most dire circumstances. A report commissioned by that newspaper reveals that the average fanning enterprise in the west country is made up of a husband, wife and full-time working son, who will work

between them more than 140 hours a week, for which the average return is about 85p an hour—way below any average minimum wage.
Such figures make one realise that the industry is in crisis and given the financial havoc that that wreaks on farming families, it is small wonder that the Farmers Weekly, as several hon. Members have mentioned, last week discussed not money and the prices of food or cereal, but farmers who are driven to the verge of desperation. I have never before seen an editorial in a farming magazine putting out the number for the Samaritans. That is no idle comment because it is obvious to anyone who reads the agricultural press that farming suicides occur about once a week. That is the measure of the crisis in British agriculture.
Conservative Members have never made the case that the crisis started on 1 May last year. The indictment has never been that the Government are to blame; it is that the crisis was manifest and the Government were not acting.
I pay due credit to the way in which the Minister has spoken tonight. Mood music matters, and the right hon. Gentleman's approach is in marked contrast to that of the Secretary of State for Health, who at a rural health forum last week contemptuously dismissed the idea that it was necessary to put any money into a study on rural deprivation.
The Minister has come across as an absolute sweetie tonight, but he has been in control for the past three months and he could in the first three hours have lifted the ban on beef on the bone. Soft music matters, but the Government have presided over the beef ban longer than the previous Conservative Administration. The conditions set down in Florence were met even before the previous election. Developments only last week, when the Commission took action on the BSE crisis in Portugal, will give cover to those in Europe who want to ensure that even now the beef ban is not lifted. The Minister should consider the way in which tallow has been treated recently. We are still waiting for a visit from the Commission to consider our arrangements on that. He will understand why I am not convinced that we are standing on the threshold of an instant lifting of the ban.
On agrimonetary funds, my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) made it clear that if circumstances changed he would certainly revisit the debate. It is common ground that the situation has changed.
I commend the Minister of Agriculture. There is no doubt that he has tonight conceded the case that has been constantly made by Conservative Members. Moreover, he has accepted many of the measures that we set out in "Fair Deal for Farmers".
We need to study the detail. I note what the Minister said about arrangements that he has reached with supermarkets, but he said nothing about food produced by means that would be illegal in this country. I therefore tell the Minister that we shall want another debate soon. We shall want a debate in Government time to allow us to examine carefully the measures that he intends to bring before the House.
By standing four square by the country community, the Conservative party has produced this change of heart. I say to the Minister: the jury is out on the Minister of Agriculture. I commend him for having the humility to admit that the jury is out, but we shall return to the subject.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): In the short time available—for which I do not apologise, as in last week's debate I spoke for 40 minutes with a dozen interventions—I praise my right hon. Friend the Minister's tour de force tonight. I thank everyone who has spoken for the way in which they made their case, and I thank my right hon. Friend for the way in which he listened. It is no bad thing to have agriculture debates two weeks running. Those who have listened to the debate and who read the pages of Hansard will see the footprints of the farming community across the pages of Hansard in the speeches that were made tonight.
I say almost as an aside that there has been near tripartisanship in the House tonight. To send the right signals to the farming community in this country and to those abroad, we must win friends and influence people. Therefore, on reflection, the Opposition might not want to press their motion to a vote.
Last week, I told the House the totals of subsidies paid by Government to farming. Those are very substantial sums of money, one of which my right hon. Friend the Minister mentioned tonight—the global sum of £600 million a year paid to the hill farming community. When I was walking a hill farm in Cumbria last Friday morning, having listened to farmers the previous evening, I promised hill farmers that I would give others pause for thought by expressing their point of view tonight.
About £20 million a year in farming subsidy goes into the Lake district. The income generated from tourism there is estimated at £580 million a year. No one would argue that that massive tourism income would be generated if the Lake district and the county of Cumbria were not looked after as they are. Therefore, although we must express the subsidy figure as £600 million because it is taxpayer's money, that figure is not the be-all and end-all. That money comes back to the Exchequer in other ways, which are not generally accepted by the accountants, who look at matters in a cold, clinical way.
I thank my right hon. Friend the Chief Secretary for coming to the debate tonight to listen to the points that were made in the wind-up. My right hon. Friend is a friend indeed.
The decision taken in Brussels today is important. Today's decision—and, I hope, the decision later this month—to lift the beef ban is very symbolic. However, no one should allow themselves to believe that beef will start to be exported until a long time after that decision, as we know from the case in Northern Ireland. The date-based scheme is slightly different. The industry will need to invest considerably because of the details of the scheme as they relate to cutting plants and abattoirs.
A substantial marketing operation will be needed, especially as there is overproduction of the product and we have lost markets. It will take a long time to win back the market. However, it is highly symbolic that the safety of British food and British beef will be recognised without exception, and that will have a ripple effect on the rest of the food industry.
We cannot deny the voluntary actions taken by supermarkets, which are currently much unloved by the community—both the farming community and the wider community—although they have been managing to take people's money by successfully converting themselves

into banks. Nevertheless, supermarkets have been making their own case with rather less panache. Yesterday, they committed themselves—particularly on pigmeat, including Parma ham, the supply of which is very limited—not to import, from 1 January 1999, pigmeat products from countries that do not provide a genuinely and absolutely level playing field.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 129, Noes 325.

Division No. 370]
[9.59 pm


AYES


Ainsworth, Peter (E Surrey)
Hunter, Andrew


Amess, David
Jack, Rt Hon Michael


Ancram, Rt Hon Michael
Jackson, Robert (Wantage)


Arbuthnot, Rt Hon James
Jenkin, Bernard


Atkinson, Peter (Hexham)
Key, Robert


Bercow, John
King, Rt Hon Tom (Bridgwater)


Beresford, Sir Paul
Kirkbride, Miss Julie


Blunt, Crispin
Laing, Mrs Eleanor


Body, Sir Richard
Lait, Mrs Jacqui


Boswell, Tim
Lansley, Andrew


Bottomley, Peter (Worthing W)
Letwin, Oliver


Brady, Graham
Lewis, Dr Julian (New Forest E)


Brazier, Julian
Lidington, David


Brooke, Rt Hon Peter
Lloyd, Rt Hon Sir Peter (Fareham)


Browning, Mrs Angela
Loughton, Tim


Bruce, Ian (S Dorset)
Luff, Peter


Burns, Simon
MacGregor, Rt Hon John


Butterfill, John
MacKay, Rt Hon Andrew


Cash, William
Maclean, Rt Hon David


Chapman, Sir Sydney (Chipping Barnet)
McLoughlin, Patrick



Madel, Sir David


Chope, Christopher
Major, Rt Hon John


Clappison, James
Malins, Humfrey


Clifton-Brown, Geoffrey
Maples, John


Collins, Tim
Mates, Michael


Colvin, Michael
Maude, Rt Hon Francis


Cormack, Sir Patrick
Mawhinney, Rt Hon Sir Brian


Cran, James
May, Mrs Theresa


Dafis, Cynog
Moss, Malcolm


Davies, Quentin (Grantham)
Nicholls, Patrick


Duncan, Alan
Norman, Archie 


Duncan Smith, Iain
Ottaway, Richard


Emery, Rt Hon Sir Peter
Page, Richard


Evans, Nigel
Paice, James


Faber, David
Paterson, Owen


Fabricant, Michael
Pickles, Eric


Forth, Rt Hon Eric
Prior, David


Fox, Dr Liam
Randall, John


Fraser, Christopher
Redwood, Rt Hon John


Gale, Roger
Robathan, Andrew


Garnier, Edward
Robertson, Laurence (Tewk'b'ry)


Gibb, Nick
Roe, Mrs Marlon (Broxbourne)


Gill, Christopher
Ruffley, David


Gillan, Mrs Cheryl
St Aubyn, Nick


Goodlad, Rt Hon Sir Alastair
Sayeed, Jonathan


Gorman, Mrs Teresa
Shephard, Rt Hon Mrs Gillian


Gray, James
Simpson, Keith (Mid-Norfolk)


Green, Damian
Soames, Nicholas


Greenway, John
Spelman, Mrs Caroline


Grieve, Dominic
Spicer, Sir Michael


Gummer, Rt Hon John
Spring, Richard


Hamilton, Rt Hon Sir Archie
Stanley, Rt Hon Sir John


Hammond, Philip
Steen, Anthony


Hawkins, Nick
Swayne, Desmond


Hayes, John
Syms, Robert


Heald, Oliver
Tapsell, Sir Peter


Heathcoat-Amory, Rt Hon David
Taylor, John M (Solihull)


Hogg, Rt Hon Douglas
Taylor, Sir Teddy


Horam, John
Townend, John


Howarth, Gerald (Aldershot)
Tredinnick, David






Trend, Michael
Woodward, Shaun


Tyrie, Andrew
Yeo, Tim


Whitney, Sir Raymond
Young, Rt Hon Sir George


Widdecombe, Rt Hon Miss Ann



Wilkinson, John
Tellers for the Ayes:


Winterton, Mrs Ann (Congleton)
Mr. Stephen Day and


Winterton, Nicholas (Macdesfield)
Mr. Nigel Waterson.


NOES


Abbott, Ms Diane
Cook, Frank (Stockton N)


Adams, Mrs Irene (Paisley N)
Cooper, Yvette


Ainger, Nick
Corbett, Robin


Ainsworth, Robert (Cov'try NE)
Corbyn, Jeremy


Alexander, Douglas
Corston, Ms Jean


Allan, Richard
Cotter, Brian


Allen, Graham
Cousins, Jim


Anderson, Donald (Swansea E)
Crausby, David


Anderson, Janet (Rossendale)
Cryer, Mrs Ann (Keighley)


Armstrong, Ms Hilary
Cryer, John (Hornchurch)


Ashton, Joe
Cummings, John


Atkins, Charlotte
Cunningham, Jim (Cov'try S)


Baker, Norman
Curtis-Thomas, Mrs Claire


Ballard, Jackie
Darling, Rt Hon Alistair


Barnes, Harry
Darvill, Keith


Barron, Kevin
Davey, Edward (Kingston)


Battle, John
Davey, Valerie (Bristol W)


Bayley, Hugh
Davidson, Ian


Beard, Nigel
Davies, Rt Hon Denzil (Llanelli)


Beckett, Rt Hon Mrs Margaret
Dawson, Hilton


Beith, Rt Hon A J
Dean, Mrs Janet


Bell, Stuart (Middlesbrough)
Denham, John


Benn, Rt Hon Tony
Dismore, Andrew


Bermingham, Gerald
Dobbin, Jim


Berry, Roger
Dobson, Rt Hon Frank


Best, Harold
Donohoe, Brian H


Betts, Clive
Dowd, Jim


Blears, Ms Hazel
Drew, David


Borrow, David
Drown, Ms Julia


Bradley, Keith (Withington)
Eagle, Angela (Wallasey)


Bradley, Peter (The Wrekin)
Eagle, Maria (L'pool Garston)


Bradshaw, Ben
Edwards, Huw


Brake, Tom
Efford, Clive


Brand, Dr Peter
Ellman, Mrs Louise


Breed, Colin
Ennis, Jeff


Brown, Rt Hon Nick (Newcastle E)
Fatchett, Derek


Browne, Desmond
Fearn, Ronnie


Buck, Ms Karen
Field, Rt Hon Frank


Burden, Richard
Fisher, Mark


Burgon, Colin
Fitzsimons, Lorna


Burnett, John
Flynn, Paul


Butler, Mrs Christine
Foster, Michael J (Worcester)


Byers, Rt Hon Stephen
Galbraith, Sam


Campbell, Alan (Tynemouth)
Galloway, George


Campbell, Mrs Anne (C'bridge)
Gardiner, Barry


Campbell, Ronnie (Blyth V)
George, Andrew (St Ives)


Campbell-Savours, Dale
Gerrard, Neil


Cann, Jamie
Gibson, Dr Ian


Caplin, Ivor
Godman, Dr Norman A


Caton, Martin
Godsiff, Roger


Chapman, Ben (Wirral S)
Goggins, Paul


Chaytor, David
Golding, Mrs Llin


Chidgey, David
Gordon, Mrs Eileen


Clapham, Michael
Gorrie, Donald


Clark, Rt Hon Dr David (S Shields)
Griffiths, Jane (Reading E)


Clark, Dr Lynda (Edinburgh Pentlands)
Griffiths, Nigel (Edinburgh S)



Griffiths, Win (Bridgend)


Clark, Paul (Gillingham)
Grogan, John


Clarke, Charles (Norwich S)
Gunnell, John


Clarke, Eric (Midlothian)
Hall, Mike (Weaver Vale)


Clarke, Rt Hon Tom (Coatbridge)
Hall, Patrick (Bedford)


Clelland, David
Hamilton, Fabian (Leeds NE)


Coaker, Vernon
Harris, Dr Evan


Coffey, Ms Ann
Harvey, Nick


Cohen, Harry
Heal, Mrs Sylvia


Coleman, Iain
Heath, David (Somerton & Frome)


Connarty, Michael
Henderson, Ivan (Harwich)





Heppell, John
Michie, Mrs Ray (Argyll & Bute)


Hesford, Stephen
Miller, Andrew


Hill, Keith
Mitchell, Austin


Hinchliffe, David
Moffatt, Laura


Home Robertson, John
Moonie, Dr Lewis


Hopkins, Kelvin
Moran, Ms Margaret


Howarth, George (Knowsley N)
Morgan, Ms Julie (Cardiff N)


Howells, Dr Kim
Morgan, Rhodri (Cardiff W)


Hoyle, Lindsay
Morris, Ms Estelle (B'ham Yardley)


Hughes, Ms Beverley (Stretford)
Mowlam, Rt Hon Marjorie


Humble, Mrs Joan
Mudie, George


Hurst, Alan
Mullin, Chris


Hutton, John
Murphy, Denis (Wansbeck)


Iddon, Dr Brian
Murphy, Jim (Eastwood)


Jackson, Ms Glenda (Hampstead)
Naysmith, Dr Doug


Jackson, Helen (Hillsborough)
Oaten, Mark


Jamieson, David
Olner, Bill


Jenkins, Brian
O'Neill, Martin


Johnson, Miss Melanie(Welwyn Hatfield)
ÖOpik, Lembit



Organ, Mrs Diana


Jones, Barry (Alyn & Deeside)
Osborne, Ms Sandra


Jones, Mrs Fiona (Newark)
Palmer, Dr Nick


Jones, Jon Owen (Cardiff C)
Pearson, Ian


Jones, Dr Lynne (Selly Oak)
Pendry, Tom


Jones, Martyn (Clwyd S)
Pickthall, Colin


Kaufman, Rt Hon Gerald
Pike, Peter L


Keeble, Ms Sally
Plaskitt, James


Keen, Alan (Feltham & Heston)
Pollard, Kerry


Keen, Ann (Brentford & Isleworth)
Pond, Chris


Kelly, Ms Ruth
Pope, Greg


Kemp, Fraser
Pound, Stephen


Kennedy, Charles (Ross Skye)
Powell, Sir Raymond


Kennedy, Jane (Wavertree)
Prentice, Ms Bridget (Lewisham E)


Kidney, David
Prentice, Gordon (Pendle)


Kilfoyle, Peter
Prosser, Gwyn


King, Andy (Rugby & Kenilworth)
Purchase, Ken


Kumar, Dr Ashok
Quin, Ms Joyce


Ladyman, Dr Stephen
Radice, Giles


Laxton, Bob
Rapson, Syd


Lepper, David
Raynsford, Nick


Leslie, Christopher
Reid, Rt Hon Dr John (Hamilton N)


Levitt, Tom
Rendel, David


Lewis, Ivan (Bury S)
Robinson, Geoffrey (Cov'try NW)


Linton, Martin
Rogers, Allan


Livingstone, Ken
Rooker, Jeff


Livsey, Richard
Rooney, Terry


Lloyd, Tony (Manchester C)
Ross, Ernie (Dundee W)


Lock, David
Rowlands, Ted


Love, Andrew
Roy, Frank


McAvoy, Thomas
Ruddock, Ms Joan


McCabe, Steve
Ryan, Ms Joan


McCafferty, Ms Chris
Salter, Martin


Macdonald, Calum
Sanders, Adrian


McDonnell, John
Savidge, Malcolm


McFall, John
Sawford, Phil


McGuire, Mrs Anne
Sedgemore, Brian


McIsaac, Shona
Shaw, Jonathan


McKenna, Mrs Rosemary
Sheerman, Barry


Mackinlay, Andrew
Sheldon, Rt Hon Robert


Maclennan, Rt Hon Robert
Shipley, Ms Debra


McNulty, Tony
Simpson, Alan (Nottingham S)


Mactaggart, Fiona
Singh, Marsha


McWalter, Tony
Skinner, Dennis


McWilliam, John
Smith, Rt Hon Andrew (Oxford E)


Mahon, Mrs Alice
Smith, Miss Geraldine (Morecambe & Lunesdale)


Marsden, Gordon (Blackpool S)



Marsden, Paul (Shrewsbury)
Smith, John (Glamorgan)


Marshall, David (Shettleston)
Smith, Llew (Blaenau Gwent)


Marshall-Andrews, Robert
Smith, Sir Robert (W Ab'd'ns)


Martlew, Eric
Snape, Peter


Maxton, John
Southworth, Ms Helen


Meacher, Rt Hon Michael
Spellar, John


Meale, Alan
Squire, Ms Rachel


Merron, Gillian
Starkey, Dr Phyllis


Michael, Alun
Steinberg, Gerry


Michie, Bill (Shef'ld Heeley)
Stevenson, George






Stewart, Ian (Eccles)
Twigg, Stephen (Enfield)


Stoate, Dr Howard
Tyler, Paul


Strang, Rt Hon Dr Gavin
Vaz, Keith


Straw, Rt Hon Jack
Vis, Dr Rudi


Stringer, Graham
Wallace, James


Stunell, Andrew
Wareing, Robert N


Sutcliffe, Gerry
Webb, Steve


Taylor, Rt Hon Mrs Ann (Dewsbury)
White, Brian



Wicks, Malcolm


Taylor, Ms Dari (Stockton S)
Williams, Rt Hon Alan (Swansea W)


Taylor, David (NW Leics)



Taylor, Matthew (Truro)
Williams, Alan W (E Carmarthen)


Temple-Morris, Peter
Willis, Phil


Thomas, Gareth (Clwyd W)
Wills, Michael


Timms, Stephen
Winnick, David


Tipping, Paddy
Wise, Audrey


Todd, Mark
Wood, Mike


Touhig, Don
Worthington, Tony


Trickett, Jon
Wright, Anthony D (Gt Yarmouth)


Truswell, Paul
Wright, Dr Tony (Cannock)


Turner, Dennis (Wolveht'ton SE)



Turner, Dr Desmond (Kemptown)
Tellers for the Noes:


Turner, Dr George (NW Norfolk)
Mr. David Hanson and


Twigg, Derek (Halton)
Mr. Kevin Hughes.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No.31 (Questions on amendments):—

The House divided: Ayes 248, Noes 132.

Division No. 371]
[10.13 pm


AYES


Abbott, Ms Diane
Clark, Dr Lynda (Edinburgh Pentlands)


Adams, Mrs Irene (Paisley N)



Ainger, Nick
Clark, Paul (Gillingham)


Ainsworth, Robert (Cov'try NE)
Clarke, Charles (Norwich S)


Alexander, Douglas
Clarke, Eric (Midlothian)


Allen, Graham
Clarke, Rt Hon Tom (Coatbridge)


Anderson, Donald (Swansea E)
Clelland, David


Anderson, Janet (Rossendale)
Coaker, Vernon 


Armstrong, Ms Hilary
Coffey, Ms Ann 


Atkins, Charlotte
Cohen, Harry 


Barnes, Harry
Coleman, Iain


Barron, Kevin 
Connarty, Michael


Battle, John
Cook, Frank (Stockton N)


Bayley, Hugh
Cooper, Yvette


Beard, Nigel
Corbett, Robin


Beckett, Rt Hon Mrs Margaret
Corbyn, Jeremy


Bermingham, Gerald
Corston, Ms Jean


Betts, Clive
Cousins, Jim


Blears, Ms Hazel
Crausby, David


Borrow, David
Cryer, John (Hornchurch)


Bradley, Keith (Withington)
Cummings, John


Bradley, Peter (The Wrekin)
Cunningham, Jim (Cov'try S)


Bradshaw, Ben
Curtis-Thomas, Mrs Claire


Brown, Rt Hon Nick (Newcastle E)
Darvill, Keith


Browne, Desmond
Davey, Valerie (Bristol W)


Buck, Ms Karen
Davidson, Ian


Burden, Richard
Davies, Rt Hon Denzil (Llanelli)


Burgon, Colin
Dean, Mrs Janet


Butler, Mrs Christine
Dismore, Andrew


Byers, Rt Hon Stephen
Dobbin, Jim


Campbell, Alan (Tynemouth)
Dobson, Rt Hon Frank


Campbell, Mrs Anne (C'bridge)
Donohoe, Brian H


Campbell-Savours, Dale
Dowd, Jim


Cann, Jamie
Drew, David


Caplin, Ivor
Drown, Ms Julia


Caton, Martin
Eagle, Angela (Wallasey)


Chapman, Ben (Wirral S)
Eagle, Maria (L'pool Garston)


Chaytor, David
Edwards, Huw


Clapham, Michael
Ellman, Mrs Louise


Clark, Rt Hon Dr David (S Shields)
Fatchett, Derek





Fisher, Mark
Meale, Alan


Fitzsimons, Lorna
Merron, Gillian


Foster, Michael J (Worcester)
Michael, Alun


Galbraith, Sam
Michie, Bill (Shef'ld Heeley)


Gardiner, Barry 
Miller, Andrew


Gerrard, Neil 
Mitchell, Austin


Gibson, Dr Ian
Moffatt, Laura


Godman, Dr Norman A
Moonie, Dr Lewis


Goggins, Paul
Moran, Ms Margaret


Golding, Mrs Llin
Morgan, Ms Julie (Cardiff N)


Gordon, Mrs Eileen
Morgan, Rhodri (Cardiff W)


Griffiths, Jane (Reading E)
Morris, Ms Estelle (B'ham Yardley)


Griffiths, Win (Bridgend)
Mudie, George


Grogan, John
Mullin, Chris


Gunnell, John
Murphy, Denis (Wansbeck)


Hall, Mike (Weaver Vale)
Murphy, Jim (Eastwood)


Hall, Patrick (Bedford)
Naysmith, Dr Doug


Hamilton, Fabian (Leeds NE)
Olner, Bill


Heal, Mrs Sylvia
O'Neill, Martin


Henderson, Ivan (Harwich)
Osborne, Ms Sandra


Heppell, John
Palmer, Dr Nick


Hesford, Stephen 
Pearson, Ian


Hill, Keith
Pendry, Tom


Hinchliffe, David
Pickthall, Colin


Home Robertson, John
Pike, Peter L


Howarth, George (Knowsley N)
Plaskitt, James


Hughes, Ms Beverley (Stretford)
Pollard, Kerry


Hurst, Alan
Pond, Chris


Hutton, John
Pope, Greg 


Iddon, Dr Brian
Pound, Stephen


Jackson, Helen (Hillsborough)
Prentice, Ms Bridget (Lewisham E)


Jenkins, Brian
Prentice, Gordon (Pendle)


Johnson, Miss Melanie(Welwyn Hatfield)
Prosser, Gwyn



Quin, Ms Joyce


Jones, Barry (Alyn & Deeside)
Radice, Giles


Jones, Mrs Fiona (Newark)
Rapson, Syd


Jones, Martyn (Clwyd S)
Raynsford, Nick


Kaufman, Rt Hon Gerald
Reid, Rt Hon Dr John (Hamilton N)


Keeble, Ms Sally
Robinson, Geoffrey (Cov'try NW)


Keen, Alan (Feltham & Heston)
Rooker, Jeff 


Keen, Ann (Brentford & Isleworth)
Rooney, Terry


Kelly, Ms Ruth
Ross, Ernie (Dundee W)


Kemp, Fraser
Rowlands, Ted


Kennedy, Jane (Wavertree)
Roy, Frank


Kidney, David
Ruddock, Ms Joan


Kilfoyle, Peter
Ryan, Ms Joan


King, Andy (Rugby & Kenilworth)
Salter, Martin


Kumar, Dr Ashok
Savidge, Malcolm


Ladyman, Dr Stephen
Sawford, Phil


Lepper, David
Sedgemore, Brian


Leslie, Christopher
Shaw, Jonathan


Levitt, Tom
Sheerman, Barry


Lewis, Ivan (Bury S)
Simpson, Alan (Nottingham S)


Linton, Martin
Singh, Marsha


Lloyd, Tony (Manchester C)
Skinner, Dennis


Lock, David
Smith, Rt Hon Andrew (Oxford E)


Love, Andrew
Smith, Miss Geraldine(Morecambe & Lunesdale)


McAvoy, Thomas



McCabe, Steve
Southworth, Ms Helen


McCafferty, Ms Chris
Spellar, John


McDonnell, John
Squire, Ms Rachel


McFall, John
Starkey, Dr Phyllis


McGuire, Mrs Anne
Steinberg, Gerry


McIsaac, Shona
Stewart, Ian (Eccles)


McKenna, Mrs Rosemary
Stoate, Dr Howard


Mackinlay, Andrew
Strang, Rt Hon Dr Gavin


McNulty, Tony
Straw, Rt Hon Jack


Mactaggart, Fiona
Sutcliffe, Gerry


McWalter, Tony
Taylor, Rt Hon Mrs Ann (Dewsbury)


Mahon, Mrs Alice



Marsden, Gordon (Blackpool S)
Taylor, Ms Dari (Stockton S)


Marsden, Paul (Shrewsbury)
Taylor, David (NW Leics)


Marshall, David (Shettleston)
Temple-Morris, Peter


Marshall-Andrews, Robert
Thomas, Gareth (Clwyd W)


Maxton, John
Timms, Stephen


Meacher, Rt Hon Michael
Tipping, Paddy






Todd, Mark
Williams, Alan W (E Carmarthen)


Touhig, Don
Wills, Michael


Trickett, Jon
Winnick, David


Truswell, Paul
Wise, Audrey


Turner, Dr Desmond (Kemptown)
Wood, Mike


Turner, Dr George (NW Norfolk)
Worthington, Tony


Twigg, Derek (Halton)
Wright, Anthony D (Gt Yarmouth)


Twigg, Stephen (Enfield)
Wright, Dr Tony (Cannock)


Vaz, Keith



Vis, Dr Rudi
Tellers for the Ayes: 


Wareing, Robert N
Mr. David Hanson and


Wicks, Malcolm
Mr. Kevin Hughes.




NOES


Ainsworth, Peter (E Surrey)
Hammond, Philip


Allan, Richard
Harris, Dr Evan 


Amess, David
Harvey, Nick


Ancram, Rt Hon Michael
Hawkins, Nick


Arbuthnot, Rt Hon James
Hayes, John


Atkinson, Peter (Hexham)
Heald, Oliver


Baker, Norman
Heath, David (Somerton & Frome)


Ballard, Jackie
Heathcoat-Amory, Rt Hon David


Beith, Rt Hon A J
Hogg, Rt Hon Douglas


Bercow, John 
Howarth, Gerald (Aldershot)


Blunt, Crispin
Jack, Rt Hon Michael


Boswell, Tim
Jackson, Robert (Wantage)


Bottomley, Peter (Worthing W)
Kennedy, Charles (Ross Skye)


Brake, Tom
King, Rt Hon Tom (Bridgwater)


Brand, Dr Peter
Kirkbride, Miss Julie


Brazier, Julian
Laing, Mrs Eleanor


Breed, Colin
Lait, Mrs Jacqui 


Brooke, Rt Hon Peter
Lansley, Andrew


Browning, Mrs Angela
Letwin, Oliver


Bruce, Ian (S Dorset)
Lewis, Dr Julian (New Forest E)


Burnett, John
Lidington, David


Burns, Simon
Livsey, Richard


Butterfill, John
Lloyd, Rt Hon Sir Peter (Fareham)


Cash, William
Luff, Peter


Chapman, Sir Sydney(Chipping Barnet)
MacGregor, Rt Hon John



MacKay, Rt Hon Andrew


Chidgey, David
Maclean, Rt Hon David


Chope, Christopher
Maclennan, Rt Hon Robert


Clifton-Brown, Geoffrey
McLoughlin, Patrick


Collins, Tim
Madel, Sir David


Colvin, Michael
Major, Rt Hon John


Cotter, Brian
Maude, Rt Hon Francis


Cran, James
Mawhinney, Rt Hon Sir Brian


Davies, Quentin (Grantham)
May, Mrs Theresa


Day, Stephen
Michie, Mrs Ray (Argyll & Bute)


Duncan, Alan
Nicholls, Patrick


Duncan Smith, Iain
Norman, Archie


Emery, Rt Hon Sir Peter
Oaten, Mark


Evans, Nigel
Öpik, Lembit


Faber, David
Ottaway, Richard 


Fabricant, Michael
Page, Richard 


Fearn, Ronnie
Paice, James


Fox, Dr Liam
Paterson, Owen


Fraser, Christopher
Prior, David


Garnier, Edward
Randall, John 


George, Andrew (St Ives)
Redwood, Rt Hon John


Gibb, Nick
Rendel, David


Gill, Christopher
Robathan, Andrew


Goodlad, Rt Hon Sir Alastair
Robertson, Laurence (Tewk'b'ry)


Gorman, Mrs Teresa
Ruffley, David


Gorrie, Donald
Russell, Bob (Colchester)


Gray, James
St Aubyn, Nick


Green, Damian
Sanders, Adrian


Grieve, Dominic
Sayeed, Jonathan


Gummer, Rt Hon John
Smith, Sir Robert (W Ab'd'ns)


Hamilton, Rt Hon Sir Archie
Spelman, Mrs Caroline





Spicer, Sir Michael
Webb, Steve


Spring, Richard
Widdecombe, Rt Hon Miss Ann


Stanley, Rt Hon Sir John
Wilkinson, John


Swayne, Desmond
Willis, Phil


Syms, Robert
Winterton, Mrs Ann (Congleton)


Taylor, John M (Solihull)
Winterton, Nicholas (Macclesfield)


Taylor, Matthew (Truro)
Woodward, Shaun


Trend, Michael
Yeo, Tim


Tyler, Paul
Young, Rt Hon Sir George


Tyrie, Andrew
Tellers for the Noes:


Wallace, James
Mr. Andrew Stunell and


Waterson, Nigel 
Mr. Edward Davey.

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House welcomes the Government's strong commitment to the United Kingdom farming industry and to the wider rural economy; recognises that the lifting of the beef export ban in Northern Ireland represents the first crucial step towards lifting the ban from all parts of the United Kingdom; welcomes the steps which the Government has taken since May 1997 to support the beef and sheep industry via EU agri-monetary compensation and relief from charges; acknowledges the steps taken specifically to help the sheep, pig and cereal sectors with targeted EU measures; and endorses the Government's intention to bring about a secure and viable future for United Kingdom farming by seeking a reformed Common Agricultural Policy, which is more economically rational, which reduces the bureaucratic burden on farmers, which enhances targeted support for the rural economy, which serves the consumer well and which contains fair and common rules to ensure that the United Kingdom's farming and food industries can exploit their competitive advantages in European and world markets.

PETITION

Benefit Integrity Project

Mr. Nigel Waterson: I beg leave to present a petition from my constituency about the benefit integrity project as it applies to the chronically disabled. The petition says that it refers in particular to
women between the ages of 60 and 65, whilst the over-65s are amongst the groups exempt from this project. Sadly, it is not likely that disabled people of this age are going to get better, or need less care.
The petition is signed by nearly 700 of my constituents, in particular Mrs. Diane Roberts, who prepared it. It continues:
The Petitioners therefore request, with respect to the House, that the House amend the minimum exemption age to 60, and allow the elderly Life Award Chronic Disabled to live their difficult, stressful and painful lives without the added worry of benefit cuts, and being under suspicion of fraud. The Petitioners ask, with respect, on behalf of all the disabled and their, at best, poorly paid carers, for the House to look again at the Benefit Integrity Project, not to take away such benefits, but give them some much needed help.

And the Petitioners remain, etc.

To lie upon the Table.

Information Warfare

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]

Mrs. Jacqui Lait: I am delighted that I have been able to bring up the subject of information warfare tonight. I had hoped to be able to take part in the recent debate on the strategic defence review, but was unsuccessful. However, I now have half an hour of the Minister's undivided attention, which is infinitely better.
If anybody thinks about information warfare—not many do—they think it the stuff of science fiction. Indeed, I can remember reading a novel that uses information warfare techniques for criminal purposes. Having taken an interest in the subject, the more I think about it, the more I am convinced that this country is not able to defend itself from an attack that could happen at any time.
I read the strategic defence review document to try to find out what is planned to tackle the problem, and found references to it only in paragraph 34, which defined information warfare, and paragraph 35, which merely said:
 "While we cannot predict the detailed impact of such changes over twenty years, we have taken a hard look at how we can seek to make the most of emerging trends in all areas of the Review, including how to adapt our requirements and procurement processes so that we are not left behind by the speed of change.
I then wrote to the Minister for Defence Procurement, who is in the other place. He quoted me paragraphs 16 and 17 of supporting essay 3, entitled "The Impact of Technology", which, frankly, was not much more enlightening. It could be described as a blizzard of words.
I am sure that Ministers and officials are concerned about the threat, and undoubtedly are working hard to counter it. My concern is that it must be countered as effectively as humanly possible, and I am not sure that the United Kingdom is doing that.
The neatest and shortest explanation of information warfare that I have found so far is contained in the review. It says:
 "information warfare attacks through the computer systems on which both our forces and civil society increasingly depend.
The military no longer has its own specifications for computer equipment. With the demand from civilian life far outstripping that from the military, high-tech equipment such as computers, chips, motherboards and all the paraphernalia that now make our lives so much easier is interchangeable. That could allow some person or group of evil intent, with the necessary expertise—not so difficult to come by nowadays—to attack computer systems and networks both in the military sphere and in crucial areas of civilian life.
For example, the whole of the Ministry of Defence budget, at some time or another, goes through the City of London's banking system; military planes and helicopters cannot move without civilian air traffic control; nothing can be operated without access to electricity, which is produced in the civilian sphere; and military communications use private sector-owned landlines, cables and satellites.
If only one terrorist group, pressure group, foreign intelligence service, foreign power, rogue military or criminal used only one computer buff, any one or all of

those systems could be closed down and the country brought to its knees. It does not take a lot of imagination to envisage a good computer hacker getting into the chip that controls a pumping station and instructing the national electricity grid to shut down, and the mind boggles at someone getting into the air traffic control computers. The banking system and the City of London could be bled dry, and every penny sent to an offshore address, or our telecommunication and data systems could be closed down.
Those would be civilian disasters, but every scenario that I have described affects the MOD directly, and the country would lie defenceless at the mercy of whoever wished to defeat it, without a shot being fired or our forces alerted. There is no point in saying, "But it wouldn't happen." It already does. Banks have had money misappropriated by hackers, and I understand that our air traffic control system, which is regarded as robust, has already suffered from "spoofing" as someone tried to get information from it. The new system, which will be Europewide, will be even more open and, hence, much more vulnerable.
Everyone who uses computers—people in utilities, banks, telecommunications and the defence industry— uses commercial systems and commercial software. The software is written all over the world. Everyone uses subcontractors. I understand that there are about 60 microprocessors in Eurofighter alone. Does anyone know exactly where they were made and who has written the software?
Many people use subcontractors for the maintenance of their computer systems. I am told by those who know about these things that "maintenance ports" are often left open. That provides an easy way into the system.
I hope that I have made it clear that any developed country using modern technology is vulnerable to information warfare attack. The real question is, how are we going to defend ourselves? We will need to do so— we cannot escape it.
In the mid-1990s, President Yeltsin said:
 "While maintaining our nuclear potential at proper level, we need to devote more attention to developing the entire range and means of information warfare.
The cold war may have ended, but cold war warriors are aware of the potential of this threat.
For information and ideas, I turned to the United States. Given the lack of information in the strategic defence review, I suspected that there was not much available from official sources in the United Kingdom, such as the MOD. How right I was. I searched the internet, appropriately enough. Did I find anything at all from the United Kingdom, in the new age of freedom of information? Not a dicky-bird.
The United States was different, and the entries were enlightening. There were 48, and one site explained what the United States Navy information warfare division at Port Mugu was doing to combat information warfare. Another site, which gave a good description of information warfare, has been visited 5,363 times since 14 July this year, which is an average of more than 300 visits a week. Two of them were mine. That shows that there is quite an interest in the subject.
In November 1996, the American Under-Secretary of Defence for Acquisition and Technology received a report from the Defence Science Board task force on information


warfare. It is available in full on the internet and is unclassified. The report recommended a series of actions, the prime one being that the most effective defence against information warfare attack is to ensure that everyone is aware of the issue. The United States has gone public.
I understand that the United States Department of Defence is working with all the industries most closely affected, such as the ones that I have mentioned. The Department has already sanctioned penetration tests of 12,000 supposedly secure sites. It has discovered that 90 per cent. had been penetrated and, of that 90 per cent., 95 per cent. had been undetected. Another check in 1997 showed that those already appalling statistics had become much worse.
In the light of that, what are we doing to defend ourselves in the United Kingdom? Have we made any assessment of our vulnerability? Have we put in place key point protection systems? After all, a guard and a dog at a pumping station cannot protect the chip in the pump from the computer hacker.
Does the Minister agree with the US theory that the best method of defence is wide knowledge and awareness? If he does, what is he doing about it? When will I see his policies and actions on the internet? If he does not, can he tell me and our best allies why he disagrees? It does not cost money to share information between defence and civilian industries, so the Treasury will not object. Has he invited the relevant industries to a meeting to discuss how to protect themselves and develop their awareness and education of the threat?
The resilience of our military and civilian computer systems can be enhanced at only modest cost. Has the hon. Gentleman asked for estimates? Has the Ministry of Defence developed a threat assessment that he could share with us? Has the MOD plans to create an incident report and response system? Is work going on to develop standards for information warfare and monitor their effectiveness? What is being done to ensure that protection against IW attack is a key requirement of all procurement activity? All that is defensive, so is any thought being given to developing our own attack systems? I am sure that the Minister is not complacent and will be able to reassure me that all those questions have answers that will satisfy me.
Finally, I urge the Minister, in the spirit of freedom of information and open government, to share what is happening in information warfare with the rest of the United Kingdom and with the United States—they are, I believe, happy to share their information and technology with us.

The Parliamentary Under-Secretary of State for Defence (Mr. John Spellar): I congratulate the hon. Member for Beckenham (Mrs. Lait) on her success in securing today's Adjournment debate on an issue of such importance not merely to the security of the United Kingdom, but to our ability to secure the economic and industrial benefits that new information technologies bring. I also thank her for informing me previously of the outline of her speech; I hope that our debate will be more productive as a result. I had hoped that my hon. Friend the Minister for the Armed Forces would be able to reply, as I understand that he and the hon. Lady were at the same university, but unfortunately he is on Government business elsewhere tonight.
The Government are fully alive to the threats posed by information warfare to information infrastructure in defence and in government more widely and also to the national infrastructure, which the hon. Lady highlighted. However, I must make it clear to the House that some of the wilder speculation in the media is not founded in fact.
The Government are working closely with key players in the private sector and with our allies internationally, in particular the United States, to ensure that protection of the national information infrastructure is as robust as possible.
Everyone recognises how our dependence on available information increases daily and the hon. Lady detailed some examples. That is not a unique Ministry of Defence or Government occurrence, but affects all corners of public and private life. Corporate networks, for instance, are essential to the effective management of all large organisations and, as the hon. Lady mentioned, those networks are increasingly interconnected.
In addition, the internet has emerged as a potent medium which has the potential to give every individual connected to a telephone line anywhere in the world access to information systems. The significance of that has not been overlooked by the Government.
Integrated information capabilities create a broader canvas on which to use and share information. That has tremendous benefits, not least in improving the effectiveness of our decision making. However, that wider interconnectivity also makes computer systems vulnerable to attack, as the hon. Lady rightly pointed out.
Attempts by hackers using the internet to gain access to systems are a popular subject for newspapers; they certainly make good copy and even good dramatic material for films, but we must keep them in perspective. Such attacks can originate from a wide range of adversaries, who may include terrorists and criminals as well as mischievous and malevolent individuals; they are no respecters of international boundaries. Ill-disposed insiders are also a threat to many organisations.
Unless appropriate protective measures are taken, there is a risk that information held in computers may be copied, stolen or deleted. A wide range of techniques can be used—I do not intend to discuss them here. However, it is widely known that they could include the misuse of software to transmit computer viruses or to leave small additions to existing software applications that could be activated later to damage or retransmit the information held by that computer—so-called Trojan horses. I assure the hon. Lady that such vulnerabilities in systems in all areas of government and in our national infrastructure and commerce are taken very seriously.
Hon. Members will understand why the Ministry of Defence is especially concerned with those issues, and I shall give some insight into the sort of security measures that the Government take by describing how the MOD approaches the subject.
Within the MOD, the need to guard against risks to computer systems and communications has long been recognised, and procedures and security mechanisms are in place to protect those vital assets. Those mechanisms protect secrets, they protect against damage and they authenticate recipients of information. That involves a combination of physical, people-based and technical measures.
Physical measures are part of the legacy of the United Kingdom's experience from the cold war and of our response to terrorism. We undertake regular risk and vulnerability assessments of our bases, buildings and personnel security as well as the infrastructure of our information services.
Personnel security involves training and vetting and has always been a keystone in achieving assured security. Technical measures are based on accredited security products deployed within an architecture that prevents unauthorised access to systems or to the information that they hold. We use nationally developed and approved cryptographic protection, firewalls to limit access between interconnected systems and so-called air gaps or one-way information valves around systems that hold sensitive material.
Protective measures are built into systems during their design and are accredited through a central process within the MOD. Audits of systems and procedures are conducted, and penetration testing is routinely undertaken to check for any previously unrecognised vulnerability.
As the hon. Lady said, the MOD, like all Departments and users, needs to use commercial products in many of its systems. The functionality provided by the commercial market cannot be rivalled through bespoke MOD development. The MOD has a policy to use commercial products wherever possible; that brings economy of scale and ensures that the MOD obtains maximum value for money. As she also rightly said, however, that brings its own risks.
Procedures and techniques are in place to minimise the risk associated with a commercial procurement strategy. First, many defence systems stand alone; they are not connected to the outside world because they do not need to be. Secondly, we have a requirement that key commercial applications be approved by independent UK accreditors before they can be used in any sensitive context.
The MOD supports a substantial research programme, which looks ahead and analyses the potential impact of new techniques in information technology, assessing their utility to military operations as well as any risk that they represent to existing and future defence systems.
The MOD takes an active stance, along with industry, in involving itself with the industrial standards bodies to ensure that the security standards set for the next generation of information technology can be applied with minimum further investment by the MOD.
To protect against possible information warfare incidents against the United Kingdom, there is a Government-wide unified incident reporting and alert scheme—UNIRAS—which collates all anomalies that are reported to it by those in the Government. It must be appreciated that UNIRAS attracts real incidents, false alarms and accidents, as well as physical events such as theft and destruction.
On 11 May, I answered a question on incidents involving the MOD from the hon. Member for Truro and St. Austell (Mr. Taylor), saying that, up to that time,

there was no evidence of a successful intrusion from an external source to any MOD computer system. I stand by that answer today.

Mrs. Lait: Is there any evidence of key protection points being penetrated, and has that been registered on UNIRAS? The Americans have some very worrying statistics about the penetration of key protection points.

Mr. Spellar: I will seek more information, as I did not have notice of that question, and write to the hon. Lady, subject to the usual constraints.
The United Kingdom is routinely involved in military operations with coalition partners. The strategic defence review reflected the fact that this trend is likely to be accentuated. There are special issues of information protection when our national systems need to work with those of our allies. Again, we exploit the full range of physical, people-based and technical measures to ensure that we are not exposed to new risks. We also endeavour to provide good protection across shared systems and their associated multinational infrastructures.
The MOD places a high priority on maintaining strong working relationships with our allies through forums where security standards and operating procedures are developed, as well as through a network of bilateral arrangements.
A discussion of defence against information warfare cannot be complete without reference to the wider implications to Government and commercial infrastructures. United Kingdom Governments have a good record of protecting our assets against both traditional and unconventional threats. The UK has had to deal over many years with a terrorist threat that has targeted Government, commerce and infrastructure. Information warfare is equivalent in its potential.
The knowledge and lessons learned from our experience of counter-terrorism stand us in good stead for the new threat that information warfare might pose. In particular, our experience makes it easier for the Government to work closely with key private sector players who are also well aware of the possible dangers to their own information systems.
The Government's record of maintaining a high standard of computer security is good, and we have been justifiably cautious about interconnection, but we shall look hard at existing arrangements for protecting information and information systems. We need to ensure that our policies and procedures keep pace with the fast-moving environment of information technology and we hope to announce new initiatives shortly, designed to ensure that the critical national infrastructure is adequately defended.
Protecting against information warfare is not the province of one country alone but, as I hope that I have shown, affects all who want to benefit from the advantages of greater interconnectivity. Threats from attacks on information systems are not bounded by traditional territorial boundaries. It is imperative that international co-operation and co-ordination are actively pursued.
The Government are actively addressing the threat of information warfare and the risks posed by the wider exploitation of new information technologies and greater


interconnectivity of computers; we are doing so robustly, in close co-operation with our allies, with the private sector and across government.
The UK is well placed in its understanding of the risks and how those can be controlled in the emerging world where interconnectivity is as vital to defence as it is to national infrastructure, commerce and the "knowledge economy". We cannot be complacent. if only because this is such a fast-moving subject, but I can assure hon. Members that we are taking all possible measures to ensure that our information is secure.
The MOD, and Government more generally, are addressing the risks posed by the greater exploitation of new information technology, and they are doing so from the bedrock of tried and tested security policies and procedures.
The United Kingdom has a history and wealth of experience in dealing with unconventional threats, to which information warfare is a successor. Protection against attack by information warfare is not the sole domain of the MOD. We are active in the national

and international, commercial and industrial arena, particularly in regard to the close relationship that the UK enjoys with the United States, in exchanging and discussing current information warfare issues.
In addition, the Government hope to announce shortly a package of measures that will further ensure that key IT systems in government and in the critical national infrastructure are adequately defended against the threat posed by information warfare.
I hope that I have demonstrated that the Government have been concerned to strike the right balance on this relatively new but, as the hon. Lady rightly said, extremely important subject.
There is a good level of defence in place to protect key systems in the MOD and more widely in government. I thank the hon. Lady for introducing the debate. I expect that this is not the last that we have heard of the topic, but she can be assured that we are taking effective action.

Question put and agreed to.

Adjourned accordingly at ten minutes to Eleven o 'clock.